The economy is picking up, will the stock market also?

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Many are wondering why the stock market isn't rising while we are in the midst of an economic recovery and that the forecast for GDP growth over the next 12 months ranges from 2% to 4%?

As explained in previous emails, the stock market is generally expensive and extremely high earnings growth would be needed to achieve stock performances similar to those of the 90s.

Here is an interesting statistic demonstrating that there is no direct relationship between GDP growth and big cap performances:

From Dec 31st 1964 to Dec 31st 1981, US GDP grew by 373% while the Dow Jones rose from 874.12 to 875.0 (no growth)
From Dec 31st 1981 to Dec 31st 1998, US GDP grew by 177% while the Dow Jones rose from 875.0 to 9181.43 !!!

At the risk of repeating myself, we continue to follow our systematic and disciplined approach in order to register good results.  For example, the performance of all our accounts in 2001 was 6.34% ... which gives us an average of 13.4% per year for the past 5 years.