Many will agree that on most days the market is either over valued or under valued with traders flying in and out on their gut reaction to tidbits of news and / or rumor. However, it is much harder for the average investor to act on that knowledge. In the long run it is up. The value of stocks must outperform cash over the long run for the simplest of reasons.

This is because the market, in general, represents things of value and currency represents something of diminishing value. People pay for things that they need or want and only when they value it more than the cash they have to pay for it, and sometimes they will borrow to pay.

In the long run every paper (now digital) currency in the world has gone down. At the rate the nations of the world are creating more currency this effect may become accelerated in the next few years, creating inflation driving up the cost of "things".

In this world the easiest thing to create is the governments making more money. The fact that it is easy is what gives it diminishing value over time. Building a business and making a sustained profit is hard. Since a stable economy requires a balance between the products and services in circulation and the amount of currency in circulation, and the government is not able to keep up it's share of this equation the currency value can go nowhere but down over the long run.

If you do not invest in the economy somewhere your financial strength will diminish with the currency over time. The rate will fluctuate but the long term direction is assured. Yesterday I posted Nostradamus was a punk! Have we reached bottom? partially because the nonsense I was hearing in the market place was becoming too ridiculous.

I mentioned four cash rich companies that are all up today: American Eagle Outfitters (NYSE: AEO), Apple Computer (NASDAQ: AAPL), Cisco Systems (NASDAQ: CSCO), and Intuitive Surgical (NASDAQ: ISRG). These companies have the financial strength to ride out any storm and each will see growing market share whether the economy improves or not.

If the economy improves they have the money to expand. If the economy does not improve they will gain because their weaker competitors will be driven out of business.

While Citigroup may have been instrumental in today's market bounce, there are more fundamental factors that are required for a sustained market rally. Those are housing, banking and bank liquidity, federal spending, and job growth. It is critical to remember that these elements of our economy do not have to turn positive for the market to gain ground; it is only essential for the rate of the deterioration to slow down.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of AEO, and ISRG. .