Now, the long answers. Stocks are a leading economic indicator, but aren’t the leading economic indicator. Alas, there is no definitive single indicator of what lies ahead in the economy. Few people know this better than Victor Zarnowitz, the resident business-cycle expert at the Conference Board, a nonprofit business group that took over responsibility for the Index of Leading Economic Indicators when the Commerce Department privatized it in 1995. Zarnowitz, who at 82 has seen a lot of cycles come and go, says a daily diet of nothing but stock prices will leave economy watchers malnourished. “We need other indicators as well,” he says. Hence an entire index, which Zarnowitz says is far more reliable than any single indicator. Stock prices (as measured by the S&P 500, not the Dow) are one of the 10 components in the index–and all 10 have equal weight. So stocks are no more useful in predicting the economic future than obscurities such as vendor delivery times (the slower deliveries are, the more favorable the economic outlook; I’d try to explain why, but I’m afraid you’d stop reading) or esoterica like the spread between the federal funds rate, which is what banks charge each other for overnight loans, and the interest rate on 10-year Treasury bonds (the higher the spread, the more favorable the outlook.)

Despite the huge rise in stocks, the leading indicators as a whole have been only mildly positive. In November, for instance, all the manufacturing indicators–among them the aforementioned vendor deliveries, factory orders, average weekly manufacturing hours–have all been negative. That doesn’t bode well for employment prospects. Which could mean that stock prices are sending an inaccurate economic signal, at least for the near future.

Maybe the smart guys on Wall Street know something the rest of us don’t, and the stock surge means it’s time to plunge in. But even though I’m generally an optimist–I bought heavily during the post-9-11 stock meltdown–I would tread warily. For starters, stock prices are up so much since Sept. 21 that investing is considerably more risky now than it was then. According to Aronson+Partners, a Philadelphia money-management firm, technology stocks in the S&P 500 gained 39 percent, including dividends, from Sept. 21 through year-end. Capital-goods makers were up 31 percent, and consumer discretionary companies, such as department stores, were up 32 percent. That’s a huge run over such a short period. And it’s assuming an awful lot of good news will be coming out of economic sectors that have been doing very badly.

Even though the economy may well be recovering or about to recover, it doesn’t mean that stocks are a steal. Here’s why. A stock’s price today, at least in theory, is based on expectations of what tomorrow will bring. Today’s prices reflect fairly high expectations. So if the economy turns around soon, but the recovery is anemic, it may disappoint investors enough to send stocks into a swoon. In fact, we have living, recent proof that calling the economy correctly doesn’t mean calling the stock market correctly. If you bailed out of stocks after 9-11 because you thought the economy would tank, you were completely right about the economy and completely wrong about stock prices. The Business Cycle Dating Committee (try not to snicker at the name; it’s no reflection on its members’ social lives) opined last month that post-9-11 economic trauma had pushed the already slowing economy into a full-blown recession that had started in March or April. But today’s stock prices are above Sept. 10’s levels.

Ironically, the spike in stock prices may be reinforcing exactly what we don’t need from corporate America if we’re to prosper in the long term. During previous economic slowdowns, when corporate reputations mattered more than they do now and stock prices mattered less, companies would generally wait a while before firing lots of people and cutting back on investment. In this cycle, though, corporate America has been hacking and slashing and firing pre-emptively. Part of the reason may be that the world moves a lot faster than it used to, which is generally a good thing. But forgive me a somewhat cynical thought. At a time when large parts of our society judge a chief executive by his company’s stock price, CEOs respond by caring more about their daily close and less (or not at all) about the impact corporate cutbacks have on the country. As they teach you in Business 101, what gets measured gets managed. Cutbacks in corporate capital spending are a major drag on the economy, maybe the major drag. And consumers’ fully justified fears of losing their jobs can’t be helping things. So what’s good for stock prices in the short run may be making the economy weaker in the long run than it would otherwise be.

During the late-1990s boom, everyone was talking about how Wall Street and Main Street were converging. As we all bought more stocks, everything moved together. Now, with announcements every 10 minutes about higher stock prices and the latest corporate cutbacks, Main and Wall may be forking off in different directions. The bottom line: stock prices are interesting and important. But if you want an infallible view of the future, you’ll have to find a functioning crystal ball.