Another day, another record close for stocks. The major indices hit new highs Friday. Investors were cheered by a strong reading of U.S. gross domestic product (GDP) growth. A separate report indicated the global recovery is firing on all cylinders.

President Trump today at Davos pushed his “America First” policy. A looming trade war remains a concern. The mood at the economic forum was testy. Trump was loudly booed by the foreign press when he complained of “fake” news.

Treasury Secretary Steven Mnuchin at Davos backtracked from previous statements. Mnuchin said yesterday that he wanted a weaker U.S. dollar. Today, he said a strong dollar is in America’s best interest.

The Davos forum ended Friday, to which whipsawed investors said: thank goodness.

The more important story is earnings. Corporate America continues to beat profit expectations for the fourth quarter

The economic news is good, too. The Commerce Department reported Friday that consumers and businesses propelled the economy to a 2.6% rate of growth in the fourth quarter. That pace is below the expected 3% but strong enough to fuel optimism.

Today’s “Goldilocks” GDP reading makes it less likely that the Federal Reserve will adopt a hawkish interest rate stance this year. Not too hot, not too cold — those conditions are manna for stocks. Corporate tax cuts complete the rosy picture.

The bull case remains in place. The Dow Jones Industrial Average, S&P 500 and Nasdaq all closed in the green today. The top performing sectors were health and retail.

Another positive is simultaneous growth in countries around the world. In a report this week, the International Monetary Fund said 120 economies accounting for three-quarters of global economic activity experienced growth in 2017.

The expansion affected developed and emerging economies. It’s the broadest “synchronized” global growth since 2010. That means foreign consumers are buying more American-made products.

Greed, Uber alles…

Before I get to Friday’s numbers, a quick warning about investor exuberance.

Last night, as I returned home from a dinner engagement, my Uber driver asked what I did for a living. When I told him, he grew animated. He told me that he’s been buying penny marijuana stocks. With his Visa card. Could I recommend a pot stock? I demurred.

I had just witnessed the sign of a market top.

Sure, strong earnings are driving this rally. So are positive economic data. Tax cuts are icing on the cake. But there’s something else at work. Something more worrisome. It’s the Fear of Missing Out (FOMO). You’ve heard about panic selling when a market crashes? Well, there’s also panic buying when a market is soaring.

Bernard Baruch, financial advisor to President Franklin Roosevelt, described the atmosphere immediately before the crash of 1929:

“Taxi drivers told you what to buy. The shoeshine boy could give you a summary of the day’s financial news as he worked with rag and polish. An old beggar who regularly patrolled the street in front of my office now gave me tips and, I suppose, spent the money I and others gave him in the market. My cook had a brokerage account and followed the ticker closely. Her paper profits were quickly blown away in the gale of 1929.”

Baruch was the investment guru of his day. He sold his stocks just before Black Monday. He died wealthy. He once said: “I made my money by selling too soon.”

This aging bull market faces a day of reckoning. I won’t belabor the reasons, such as high valuations. Analysts have beaten the valuation horse to death. Investors don’t want to hear it. Fear of missing out reigns. But one day, the dominant mood will just be… fear.

There’s still money to be made in stocks. But curb your enthusiasm. Seek value. And beware of stock tips from Uber drivers.

Friday Market Wrap

• DJIA: +0.85% or +223.92 points to close at 26,616.71
  
• S&P 500: +1.18% or +33.62 points to close at 2,872.87
  
• Nasdaq: +1.28% or +94.61 points to close at 7,505.77
  

Friday’s Big Gainers

• AbbVie (NYSE: ABBV) +13.59%

Biotech beats on quarterly results.

• VMWare (NYSE: VMW) +8.97%

Software firm is buy-out target.

• K12 (NYSE: LRN) +7.72%

Educator posts strong earnings.

Friday’s Big Decliners

• Aspen Insurance Holdings (NYSE: AHL) -10.65%

Insurer hit by underwriting losses.

• Thor Industries (NYSE: THO) -7.67%

RV maker sees demand slow.

• LCI Industries (NYSE: LCII) -7.61%

RV supplier faces same headwinds as THO.

Letters to the Editor

Biotech bonanza…

“What’s the biggest trend in drug development?” — Nancy M.

Biotech stocks offer outstanding growth potential. But the sector is volatile. You must choose wisely, or you can lose your shirt. All it takes is one unfavorable FDA ruling for a biotech stock to tank.

The FDA approved 46 new medicines in 2017. That’s double the total in 2016. The race is on for new sources of growth in biotech. Blockbuster drugs are losing patent protection. Competitors are joining forces to cut costs.

Progress toward a cancer cure is picking up. The most promising avenue is “immunotherapy.” It’s the hottest area of biotech research.

Immunotherapy uses the body’s immune system to treat diseases. It allows the body to be its own doctor. It’s well suited for the treatment of cancer patients who fail to respond to conventional therapies. The best investments will be firms with the most innovative immunotherapy treat­ments.

Questions about biotech? Drop me a line: mailbag@investingdaily.com

John Persinos is managing editor of Personal Finance and chief investment strategist of Breakthrough Tech Profits.