The Mad Magazine market

Despite Wednesday's commodity fueled sell-off, traders have mostly shrugged off global economic concerns. "What, us worry?"

NEW YORK (CNNMoney) -- Stocks took a nasty little tumble Wednesday, but the general trend this year has been up. up, up!

The Dow Jones industrial average (INDU) has surged nearly 10% and is now only about 10% below its all-time high from October 2007. The S&P 500 (SPX) has gained about 7% and is less than 13% away from its peak -- also from October 2007.

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Small-cap stocks are faring even better. The Russell 2000 hit an all-time high last month. And even the tech-infused Nasdaq, which may never get back to the ridiculous levels it traded at in bubbilicious March 2000, is just 4% away from the 3,000 level. The Nasdaq hasn't been that high since December 2000.

Is all this rational? Sure, earnings have been great for most companies and the economy seems to be slowly regaining its strength.

But there are myriad challenges facing the global financial markets. And investors seem to be brushing them off like Alfred E. Neuman from Mad magazine. "What me, worry?"

Sky-high oil and gas prices. The turmoil in the Middle East and North Africa. The Japan earthquake. The re-emergence of the PIIGS sovereign debt crisis in Europe. China and India doing their best Paul Volcker impersonation and raising interest rates to fight inflation.

And I haven't even started on the problems in the United States!

A housing market that's still in shambles. Short-term worries about the debt ceiling. Long-term concerns about the budget deficit. Fears that the Fed is keeping interest rates too low for too long AND opposing fears that the Fed is taking the punch bowl away too soon by letting QE2 run out next month.

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It's enough to make your head spin.

Still, some investing experts believe that as long as companies keep reporting big jumps in profits and raising their earnings guidance for 2011, the market may still have room to run.

Alan Creech, manager of the Marshall Large Cap Growth Fund (MASTX) in Milwaukee, said that many mega-cap stocks like Microsoft and Apple are still relatively cheap. Microsoft (MSFT, Fortune 500) trades at just 10 times earnings estimates for this year while Apple (AAPL, Fortune 500) is valued at 14 times this year's profit forecasts.

As long as big stocks don't get too pricey, Creech thinks that the Dow, S&P 500 and Nasdaq can climb higher. He said big stocks easily could gain another 5% to 10% by year's end.

The issue isn't that "the market" has gone too far too fast. It's that some momentum stocks, especially in tech, may have run up to unsustainable valuations.

"I don't think the market is overextended," he said. "But are there individual stocks that are overvalued? Of course. That happens all the time."

For the broader market -- and large companies in particular -- Creech said that the uncertainty around the world bears watching. But he added that the impact so far has been minimal.

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Large tech companies faced some supply chain disruption due to the Japan earthquake for example. But it wasn't major. And as bad as the problems in Europe are, Greek debt woes have yet to hurt the balance sheets of big U.S. banks.

"Absent some sort of Black Swan shock, the market is acting completely rational," Creech said, referring to the phenomenon of unpredictable surprise events made famous by author Nassim Nicholas Taleb -- and not the Natalie Portman movie that won her an Oscar.

What happens next with the commodity bubble, which one day seems to be bursting and others reinflating (today it's the former) doesn't seem to be the type of catalyst to send stocks drastically lower for an extended period of time.

David Spika, investment strategist at Westwood Holdings Group Inc. in Dallas, agreed that the market may not have peaked yet. But he said it's time for investors to be a lot more selective. He also thinks big blue chips are better bets right now.

"The easy money has been made in this market," he said. "But there are opportunities. Large-cap, high quality stocks should be able to weather global volatility better than small caps."

Spika noted that it wasn't too hard to make money in just about any asset class over the past two years thanks to all the liquidity injected into the markets by the Fed and its central bank colleagues around the world.

But that's all changing. Even though the Fed may be the last one to turn off the lights at the bar and raise interest rates, it's clear that other countries are preparing themselves for rates that are more conducive to a recovery than a crisis.

That should mean that more speculative, risky investments are likely to cool off.

"Liquidity should dry up and that will lead to slower growth," said Spika. "Earnings can't continue at the pace that they have been going."

The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, and Abbott Laboratories, La Monica does not own positions in any individual stocks.