I have no doubt that you’re not the only one asking this question. Given the recent sequestration, the strength of the market has surprised some investors. But, there are several factors behind this recent exuberance.

First and foremost, you have all of the liquidity being provided by the Federal Reserve and anemic interest rates. There will be ups and downs with some of the uncertainties we’re all aware of – lagging growth in China, political uncertainty in Italy, sluggish earnings growth – but they are being largely overlooked because of the low interest rates. Investors simply don’t want near 0% return on money market accounts and 1.9% on 10-year Treasuries when they can do so much better in stocks, both with yield and capital appreciation.

The Fed has said that interest rates will remain low until the unemployment rate declines to 6.5%,and recent data that has shown a steady labor market but no significant lowering of unemployment means no end is in sight to this current policy. However, the fear of missing a rally seems to be greater than the fear of a decline. And in the big picture, the environment remains as we expected it to be, which is largely favorable for stocks here in 2013.