Global Growth

The bull market recently turned three years old. I well recall conditions during the financial crisis three years ago and how people gave up on stocks, dumped them at what we now know were prices far below fair value. Three years later many stocks are still well below fair value yet many investors continue to sell (more money has been placed in bond funds than stock funds). They were wrong in 2009, they are wrong now.

Prospects for global growth, plus massive liquidity here and overseas, have fueled the market for three years. Billions of people -- literally billions -- are joining the middle class and buying cars, goods of all kinds, houses, the works. This transition has boosted sales of everything from toothpaste to cars and refrigerators, including thousands of products made by American companies. No wonder earnings (and stocks) have soared.

Among the strongest human attributes is that people do whatever is needed to improve their standard of living and that of their family. One need look no further than the growth in the former communist societies where people quickly made the transition to free market capitalism after many decades of central planning and economic stagnation. In China, eastern Europe, Vietnam and elsewhere, the former communists are prospering. I fully expect billions of people to do what comes naturally...and fuel global growth, rising earnings and the bull market.