16 Oct 2009 Mairs & Power Growth - Market Commentary ( Portfolio )
There is little question that the fear gripping the markets in the first quarter has dissipated and that the primary concern among investors is shifting from a fear of being in a declining market to a fear of being out of a rising market. As mentioned, much of this optimism is due to investors’ beliefs that one of the worst recessions since the 1930s appears to be coming to an end

Despite the improving economy and the rebounding stock market, there are some issues to watch longer term. The most prominent of these are rising budget deficits and the increasing federal debt. The concern is that these trends could lead to rising inflation, higher interest rates and a weaker dollar. While these issues are not an immediate threat, it is critical that future federal spending be restrained as the economy and financial system recover. On balance, we continue to believe the long-term outlook for the stock market is favorable. While the stock market is certainly not as cheap as it was earlier this year and a modest pullback would not be a surprise, valuations are still reasonable and the stock market remains over 30% below the highs reached in October of 2007. Going forward, we continue to expect long-term returns to trend toward historical averages of approximately 10% per year.