“The pessimist sees difficulties in every opportunity. The optimist sees the opportunities in every difficulty.” — Winston Churchill

Churchill’s words explain in good part why stocks have rallied since last March’s low set amid the near-collapse of the economy. The optimists have been focusing on what is working and what could work even better while minimizing the obvious and potential difficulties. They have been buying and they still are. The pessimists are on the sidelines.

Stocks continue to climb with barely a pause as investors anticipate better times. Momentum means a lot, sometimes everything. But there are reasons to be a bit concerned. For one, valuations are lofty even compared to next year’s earnings. There are other reasons.

It is hard to find any bears among professionals appearing on CNBC or Fox Business, nary a one. Everyone is optimistic to one degree or another despite the obvious difficulties for the economy and risks to our health. Few were bullish when stocks were truly cheap last March. Many were anything but. When sentiment is so one-sided, the market usually goes the other way.

Option trading is at a record high, especially among young investors on brokerage sites like RobinHood. IPOs are doing very well, too. SPACs, which are publicly traded vehicles similar to hedge funds, are all the rage even though they don’t have a business or any revenues. GameStop, a money-losing retailer of video games, was 18 in January, hit 480 two weeks ago, then fell to 90. Such extreme and mindless speculation has never been a good sign for the market. It’s another reason to be concerned. Then again …

Goldman Sachs raised its GDP growth outlook for this year to 6.6%. If correct, 2021 would be among the best years for growth and that will bode well for corporate earnings and stock prices. Credit a few tailwinds.

First, as more people are vaccinated business and life will return to pre-COVID conditions. Everything will look better by mid-year. Another tailwind will be a surge in consumer spending. People are saving too much. Normally, the savings rate is 5%. Now it’s 14%, which means a return to normal patterns will entail a massive amount of spending.

Bottom line: As long as today’s fiscal and monetary policy continues, and it will, the bull market will ride the tailwinds I mentioned and others with only occasional profit-taking such as we saw on Wednesday and early today.

David Vomund is an Incline Village-based Independent Investment Advisor. Information is found at http://www.VomundInvestments.com or by calling 775-832-8555. Clients hold the positions mentioned in this article. Past performance does not guarantee future results. Consult your financial advisor before purchasing any security.