But the real story may be that, according to financial research experts, the equity market has never before displayed the type of volatility it did in the second half of 2011 without breaking out to either the upside or downside. That singular statistical phenomenon may not matter to clients or advisors who have found the last four years to be emotionally challenging.

Back in November, I ran into an advisor I've known for almost two decades at the Schwab Advisor Services IMPACT conference. He confided that his firm had just been fired by a client of four years whose portfolio was down a whopping 1% in September.

Why has the U.S. equity market managed to defy the headlines for the last
six months? Pessimists might argue it's in denial, living in its own little bubble just as it did in late 2007 and early 2008.

On the other hand, the U.S. economy has repeatedly surprised gloomy economists during the first two months of 2011's fourth quarter. By early December, many top forecasters who had expected GDP growth of 2% in the final three months of the year were lifting their estimates to 3.5% or higher.

A wide cross-section of economic indicators on consumption to manufacturing produced a succession of data points that flew in the face of the pervasive melancholy. The upshot is that prognosticators have reduced the odds of a U.S. recession. In September, many predicted the chances of one were as high as 50%, but now many have taken that scenario off the table.

If Europe does indeed follow the predictions and enters a recession while China's expansion rate slows (as it has led the rest of the world to believe), U.S. growth of 3% or more doesn't look sustainable in 2012. Some variant of the anemic Rogoff-Reinhart recovery or the Pimco New Normal still appears to be the script that the global economy will act out for the next several years.

If there is any takeaway from the last four years,
however, it has been that the collective intellectual firepower of so-called experts could practically fit on a thimble. That's why we shouldn't be surprised that, at least for six months, the U.S. economy outsmarted the conventional wisdom.

P.S. Don't miss our new quarterly column, The Advisor's Counsel, by Brian Hamburger, who comments in this issue on the problems broker-dealers and their reps are facing with social media policies.

Evan Simonoff, Editor-in-Chief
E-mail me at esimonoff@fa-mag.com with your opinion.