Strong fundamentals will help stock market regain strength

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Nadia Cavner is senior vice president and senior financial consultant for U.S. Bancorp, managing more than $400 million in assets.|ret||ret||tab|

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The last several years have tested even the staunchest of investors. It seems each day the media is focused on our nation's problems and market woes. |ret||ret||tab|

The headlines shout the impact on our country due to questionable accounting practices, terrorism, unrest in the Middle East, war with Iraq, and weapons of mass destruction. Even Martha Stewart is brought into the foray of the bad news. The perception is that we live in unprecedented bad times for our country, and our economy is terrible.|ret||ret||tab|

Like everyone, I wish times were better for our nation, but I don't feel they are unprecedented. History tells of many similar events. We've survived, even flourished as a nation, after Pearl Harbor, the Cuban missile crisis and the Gulf War. We showed as a nation tremendous resilience during the Depression and the Cold War. The nation marched forward after the assassination of president Kennedy and the resignation of Richard Nixon. |ret||ret||tab|

Wars and rumors of war have been going on for as long as anyone can remember. We've had hostages taken and corporate scandals in the past. I agree that times could be better for our nation, but we've been down similar roads in the past. We have met every struggle and challenge head on and have become stronger. I have confidence, and history shows our nation will persevere.|ret||ret||tab|

Our economy is strong. Interest rates are the lowest in more than 40 years. Our nation has just witnessed the largest federal tax cut in 20 years. Inflation is below 2 percent, which parallels the market in the 1950s and 1960s right before a strong bull market. We've seen the strongest corporate activity in more than 20 years. |ret||ret||tab|

Our gross domestic product surged 6.1 percent the first quarter of this year and continues to be strong. Our nation is showing declines in unit labor cost, and unemployment levels are acceptable, dropping over the last three months from 5.9 percent to 5.6 percent. |ret||ret||tab|

Perception may say the economy is weak, but the fundamentals are strong. Consumer confidence is down and there is fear, both of which can be attributed to perception. Some say perception is reality, and to an extent this can be said about the market; however, at some point in time, the market will wake and see we are on firm ground. When this happens, we are ready for another positive run.|ret||ret||tab|

I'm a realist. If fundamentals were down along with the market, I would be more bearish in the short-term, but this is not the case. I believe in a long-term strategy, and history will show that the market will continue to climb, which has been the long-term trend we have seen since themarket's inception.|ret||ret||tab|

The 1990s were extraordinary times for the economy. It was the longest bull market ever in spite of marginal earnings growth. |ret||ret||tab|

The Federal Reserve recognized extreme market exuberance and acted. In time, the market slowed and gained a sense of reality, recognizing earnings did not support current market levels. Punishing correction followed an irrationally strong market. |ret||ret||tab|

The market pendulum has swung both ways, and strong fundamentals will soon be recognized and result in a stable, sustainable investment environment. The normal cycle of all markets is expansion and contraction. We need to look at our current environments as part of a natural cycle and not the end of our economy.|ret||ret||tab|

Reality is in the fundamentals, and the strength of our nation is our indomitable spirit.|ret||ret||tab|

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