If it's a bubble, it's still built on a boom

WAITING for the end of the world as we know it hasn't worked well as an investment strategy the last few years.

So how about this summer?

Things have been positively wondrous for global stock markets in recent months, but equities began to falter late last week. Wall Street has been echoing with warnings of trouble ahead.

Unfortunately, many of these warnings are little more than blinding glimpses of the obvious.

Former Federal Reserve Chairman Alan Greenspan helped trigger the latest flutter in share prices, particularly in emerging markets, after he said of the wild rally in Chinese stocks, "There is going to be a dramatic contraction at some point."

That's an old economists' trick: Describe the event, but leave it open-ended. Someday you're bound to be right.

Warnings about hot markets do serve a purpose, of course. They may keep people from becoming, well, irrationally exuberant and dumping all of their money into one asset just before it collapses.

But there's a danger that investors who listen to constant fretting about how bad things might get in the economy and markets can end up paralyzed with fear and unwilling to take even minimal risks. That may cost them dearly in terms of their long-term financial health.

After the blue-chip Standard & Poor's 500 index lost nearly 50% of its value from March 2000 to October 2002, investors now know in retrospect that they should have been buying stocks with both hands. But fear reigned until the market turned up decisively in 2003.

A basic truth about investing is that there's never a good time to buy -- meaning, there's always something to worry about. That's life.

Yet look at what the world's stock markets have overcome in recent years: record-high oil prices, rising short-term interest rates, devastating terrorist attacks in Madrid (2004) and London (2005) and, most recently, a serious U.S. housing slump.

There should be a fundamental reason stock prices have forged ahead, and here it is: The global economy has continued to expand. Consumers and businesses have continued to spend, which in turn has underpinned corporate earnings.

To be sure, easy money also is driving markets. Despite central-bank credit tightening, lenders around the planet remain eager to lend and borrowers remain eager to borrow. One result is plenty of capital for buyout firms, which are snapping up companies everywhere, thereby benefiting the shares of other firms (on the hope that a takeover bid materializes).