Trump is not killing the bull market. here’s why

More business leaders and Wall Street strategists are expressing concerns about the possible consequences of President Donald Trump’s protectionist policies and unpredictable nature on markets and the economy.

But we all know that actions speak louder than words. What investors actually do contrasts sharply with what people say. The Dow Jones, S&P 500 and Nasdaq hit all-time highs again on Friday.

And the Russell 2000 Index, an index of stocks of small companies that tend to do most of their business in the United States, is just a few points away from the all-time high it reached in last December in the wake of Trump’s stock market euphoria.

What’s more, the VIX (VIX), a measure of volatility known as Wall Street’s Fear Indicator, is also down nearly 25% this year. If investors were truly afraid of Trump, the VIX should be much higher.

And CNNMoney’s Fear & Greed Index, which looks at the VIX and six other measures of investor sentiment, shows signs of greed and isn’t far from extreme levels of greed.

Of course, Trump still can’t seem to stop tweeting about things that, let’s be honest, won’t do anything to help the economy – even though Nordstrom investors are richer despite Trump’s attacks for abandoning the brand of his daughter Ivanka.

But to give credit where credit is due, it seems the main reason stocks have been rallying again lately is because Trump has promised to unveil a “phenomenal” tax plan soon.

Related: Rare Streak for U.S. Stocks: Long Period Without a 1% Plunge

Trump also recommitted to investing more in infrastructure when he met with airline CEOs on Thursday.

This is what the market wants to hear.

“We still expect fiscal stimulus, lower taxes and less regulation,” said Matt Lockridge, manager of the Westwood Small Cap Value Fund. “The big question is timing, but it’s coming.”

Lockridge believes many companies that generate the majority of their revenue in America stand to benefit if Trump’s stimulus ultimately kicks the economy into high gear.

He likes stocks in various sectors, such as movie theater owners. Masco (FURTHER)snack business NOT A WORD (JJSF) and aerospace equipment company Kaman (KAMN).

Another fund manager said he also remained bullish on smaller U.S. stocks that could benefit from Trump’s policies.

Read: Wall Street has powerful seats at Trump’s table

Barry James, president and CEO of James Investment Research, said he purchased the iShares Russell 2000 ETF (IWM) the day after the election, because he is convinced that Trump’s stimulus plan will stimulate the growth of American small businesses.

“When Trump said America first, I really think that’s what he means,” James said, adding that he thinks the Internet phone service Vonage (VG)rental retailer with option to purchase Aaron’s (AAN) and discount chain Big prizes (BIG) could all prosper if Trump’s proposals were accepted.

But there is another reason why US markets are near their all-time highs. Despite all the uncertainty in Washington, the United States is still seen as a model of relative stability compared to other parts of the world.

The European economy remains a real wild card due to Brexit, the rise of populism in France which is raising concerns about a so-called Frexit and more concerns about a problem that never seems to go away: the debt problems of Greece.

The Japanese economy also remains stagnant. We are now talking about more than just a lost decade. It’s plural. And the Chinese economy is also slowing down.

Bond fund manager Bill Gross often joked that America was like what Johnny Cash and Kris Kristofferson sang about on “Sunday Morning Coming Down”: the “cleanest dirty shirt.”

To that end, analysts at bond-rating firm Fitch wrote in a report Friday that “elements of President Trump’s economic agenda would be positive for growth,” but added that “the current balance of risks suggests a less favorable global outcome.”

Of course, this coin has two sides. Trump’s bombing could come back to haunt him.

Related: Oreo make worries about the rise of populism

His persistent penchant for berating companies he disagrees with on Twitter could shake investor confidence.

And even though his proposed travel ban on immigrants from seven majority-Muslim countries has been overturned by the US court system for now, the president has vowed to fight for its reinstatement.

Even if he loses this battle, it’s clear that Trump is serious about turning more inward, with plans for tariffs and border-adjusted taxes that could spark trade wars with Mexico, China and Japan . This could hurt large U.S. multinational companies and lead to job losses.

But investors still seem to believe/hope that the merits of Trump’s pro-growth stimulus packages and tax cuts will outweigh the impact of isolationism. Let’s hope they’re right.

Investors may be holding their noses, closing their eyes and covering their ears with cotton wool to drown out the president. But they continue to buy stocks.

CNNMoney (New York) First published February 10, 2017: 11:55 a.m. ET