The good news just keeps coming. This week, we’ve had a seven-year record for home price increases, up over 10 percent from the year before, as well as a rise in the consumer confidence index to a five-year high.

Both show that the improvement in the U.S. economy is wide and sustainable. Representing two-thirds of the economy, consumer spending is the most important part, and higher consumer confidence and wealth suggests that spending will continue—and may well accelerate.

I’ll be out of the office for the next week on a trip to Europe, staying in Amsterdam for a week and then a couple of days in Dublin. This is a family vacation, so I’ll certainly be able to report on the five-year-old-boy perspective when I return.

On top of that, though, the trip will offer a valuable eyewitness look at two critical areas in the eurozone. The Netherlands is one of the core northern countries that’s paying the bills—and becoming increasingly conflicted about continuing to do so. I look forward to seeing how that national conversation looks on the ground.

I have written about energy before, but, based on the number of recent news stories on the topic, I think it’s worth taking another look at just how much the energy landscape has changed over the past couple of years.

Last summer, I wrote that, with so many new technologies brewing, it was almost certain that at least some of them would pan out. I wrote about the shift of narrative, recalling a meeting with clients in Massachusetts where I actually sparked an argument about which solar program was better. I wrote about how fracking would be a transition phase.

My family and I spent the holiday weekend in Maine. Unfortunately, it was in the 40s and 50s on Saturday and Sunday, and, unsurprisingly, there weren’t a lot of people at the pool. Fortunately, Jackson, my now five-year-old son, was happy to spend some quality time snuggled up next to Dad watching movies while Dad read. Sometimes, a quiet weekend is just right.

We did get out a bit, including a drive to the nature lodge on the top of Mount Agamenticus, a local mountain with wonderful views from the summit (on a clear day, which this was not) and miles of trails. Jackson and I have hiked up there before, but this time we just wanted to show it to Mom, who was duly impressed. We’ll be heading back later this summer to do some more hiking.

What we were talking about yesterday was the “inside view” of the market. As defined by Daniel Kahneman, the inside view builds up from details and is based on inside knowledge of a situation. Detailed analysis is invaluable, of course, but details can often be used to support our initial biases rather than what’s actually happening.

It is also usually worthwhile to consider the “outside view,” where we simply examine what has happened in the past, without considering the details or why things might be different this time. This bigger-picture view limits the extent to which our biases can influence the conclusions.

Yesterday, we talked about why future economic growth may well be at lower levels than it has in the past. Today, I want to look at what that might mean for future stock market returns.

It’s important to note that we’re not talking about the absolute level of growth but the difference from historical levels. This matters because, if the future is different from the past, then metrics that are based on past performance—such as stock market valuation levels—may also be different.

In yesterday’s post, I wrote that higher costs will result in lower growth. We also have other reasons to be concerned that future growth rates won’t match those of the past—with significant impacts on investing.

Here’s the short version: lower future economic growth is very likely to result in lower future stock returns. I’ll get into the details below, but one chart makes the case quite clearly.

This is a follow-up of sorts on yesterday’s post, in which I talked about resource constraints. Today, I want to take another look at that topic—specifically, how resource constraints will negatively affect growth going forward.

I’m writing this from Chicago, at the Commonwealth Retirement Symposium. My talk tomorrow, titled “The New New Normal,” will focus on how growth is expected to be lower in the future than it has been historically. I have written about this before—and am in good company with Grantham and Arnott, among others—but there’s a different way to look at the problem that may add to the discussion.

A point I have been making about the stock market recently is that it makes no sense to bet against it in the short run. The momentum is clearly on the upside, and there are no apparent reasons why that trend can’t continue. We may very well see new records for a while.

I do not, however, expect the trend to go on forever. At some point, the market will top and decline. We are already well into very unusual territory for how long an increase can last without a downturn. At some point, a decline is certain, and the longer it takes, the more certain it becomes.

A point I have been making about the stock market recently is that it makes no sense to bet against it in the short run. The momentum is clearly on the upside, and there are no apparent reasons why that trend can’t continue. We may very well see new records for a while.

I do not, however, expect the trend to go on forever. At some point, the market will top and decline. We are already well into very unusual territory for how long an increase can last without a downturn. At some point, a decline is certain, and the longer it takes, the more certain it becomes.

Two completely non-market-related stories today made me think about trends and changes. The first is about how an aquifer in the American Midwest has started to run dry. Farmers, who for generations had drawn water from it, now have to change crops because the water just isn’t there anymore. This is a trend that has run its course and is not coming back. It will take decades or centuries for the aquifer to recharge, even if left completely alone. Reading the story, the farmers have known what was coming, but they seemingly didn’t make any adjustments until they actually ran out. As a result, some of them are in financial trouble.

The other story is a comparison of the apparent patience of the peripheral European countries with their self-inflicted depressions in the name of preserving the euro. The article compares the situation in Italy and Spain with that in Argentina, where similar economic sacrifices were made to preserve a link between that country’s currency and the U.S. dollar. The commitment was total—right up until Argentina’s economy had shrunk by about 8 percent and subsequently collapsed in short order. It was only then that the country abandoned the dollar link.

The economies of the peripheral eurozone have shrunk about 8 percent right now, suggesting that perhaps the euro is not as certain as it has been assumed to be. The euro has not collapsed, but what happened in Argentina certainly suggests that it is a possibility.

The point here is that trends continue from their own momentum, often beyond what anyone would have thought possible, and then collapse. The housing market is the most recent such example here in the U.S.

Right now, we have many trends moving in the right direction—the deficit and the housing market recovery are two examples. Both are moving the right way for fundamental reasons, and they are not that far along. Moreover, they are still in what can be considered “normal” territory. The gradual recovery of the U.S. economy seems to be just such a trend.

But the primary trend supporting the increase in the stock market is increasing corporate profit margins. This trend has been going on a long time, and it is already at record levels. Even if margins remain at current levels, the idea that they will continue to expand demands that costs, especially employment costs, continue to decline. This is a trend that needs to be watched closely.

There may still be some juice to this. Who knows? But, as the trend gets older and older, and more and more into record territory, the possibility of stabilization or a reversal gets more and more likely. With current market valuations pricing in a great deal of good news, the consequences of that could be bad. Just as with margins, the upward trend of the stock market bears close watching, and plans for a decline need to be made.

As I said above, it makes no sense to bet against the market right now, but it does make sense to think about what to do if and when the market declines. Unless the laws of economics have been repealed, we know that such a decline is coming and that the time to think it through is now.