Whether you invest in the stock market or just read the financial news, you are probably coming across opinions expressed with regard to an anticipated stock market correction. After all, the market has been on a steep incline pretty much since it bottomed in the spring of 2009 during the hard recession days. Couple that with the fact that there are a lot of people who don’t “feel” like their financial situations have improved all so much and the result is that the sustained rise in the stock market can leave a person scratching his/her head for an answer as to how it keeps going.

Precious metal (gold and silver) prices are compressed, and have been falling for some time, as people seem generally unconcerned over any near-term inflation impacting the price of goods and services. Yet, we’ve all witnessed the non-stop printing of money, inflating the money supply. This rampant enlarging of the money supply would make some conclude that inflation is at hand. Also, if a person believes a very strong stock market is related to a very strong economy, that person could easily view inflation a rational outcome since rising wages and increasing demand for goods and services usually accompany a strong economy. Yet, again, current precious metal prices, which are positively correlated (move in the same direction) with inflation, reflect no concern for imminent inflation.

In my view, we are living in strange economic days. Traditional norms don’t seem to fit well. I wonder sometimes whether our social experiment (I say social since all of society is impacted), conducted by the Fed, in managing interest rates has caused some major disruptions to what would be the normal supply and demand economy. If so, it seems feasible that this is not a normal stock market. I wonder how much money is in stocks right now simply because there’s no where else to invest money presently where you can experience a reasonable return. One sure can’t make anything on a certificate of deposit these days.

If things don’t add up for me, perhaps it indeed suggests that a bit more wariness toward the height of the stock market is in order. With regard to how I manage my stock portfolio, my reaction to the thoughts expressed above is not going to be (nor should it be) the same as the next person’s. Yet, my mantra toward stock investing, albeit a boring one, is a fitting one, especially for times of heightened uncertainty. That mantra remains that the balance sheet is THE essential tool for assessing risk before one attempts to Choose Stocks Wisely.