The Economy

What is your opinion of the state of the economy? A poll taken in November by the American Research Group indicated that 43% of Americans believe that we are in a recession.

But according to Jerry Tuma of Cornerstone Financial the economy is recording some of the best growth marks in almost 40 years.

-Corporate cash to debt levels are at the best levels since 1969.
-In January the unemployment rate dropped to 4.7% (with 4% considered full employment)
-Earnings continue to rise at a record pace
-If you adjust stocks for the appropriate interest rates you'll find the stock market 30% undervalued.

One of Jerry Tuma's favorite topics is the emotion of investing. He says that bull markets go through three emotional phases.

-Skepticism - Investors are disturbed after having been through a difficult time for the market and economy. This phase occurs early in the cycle just after the recession and is marketed by fear, worry and anxiety. This is the phase we have been in for the last few years.

-Recognition - Investors begin to realize that this a good economy and market and begin to fear missing out on future gains more than they fear losing money. Jerry believes we are about to enter this phase.

The "Chase" Phase - This is the final phase and when insanity rules. It's in this phase that the new investment "geniuses" are born. Almost all fear of loss has worn off and people are looking to get rich quick. This phase will not likely hit until around 2009 or 2010.