Most investors are still nervous.

The S&P 500 has reached its highest point since September 2008. After that time though, it went on to fall 26% in two months.

Earnings season is in full swing. And with each report we see top line revenues and bottom line earnings are not rebounding nearly as fast as stocks have.

The housing market is still proving troublesome for banks too. Aside from the shadow inventory, rising foreclosures, and the expiration of the $8,000 subsidy for home buyers, bank right-offs are still on the rise.

Then there’s unemployment, tax hikes, etc.

Basically, there’s not too much to be excited about from a fundamental perspective.

That’s why, as mentioned in our free e-letter the Prosperity Dispatch, I recommend making three moves now. And whether the market continues to go higher and gloss right over the real risk in this market, or we’re really at the euphoric top, you won’t regret taking the next few minutes to do these today.

The Real Risk in Today’s Market

As we mentioned above, there are a lot of economic roadblocks. Any one of them could easily trip up the recovery – or, more likely, the appearance of a recovery.

But as so many of us learned over the past few months, the stock market and the economy are two different things. The correlation between the two is abstract, not exact.

That’s where the real risk comes into play. If the markets were to take a turn for the worse, there aren’t too many catalysts to stop the overall market from falling.

And any downturn would just be exacerbated by what’s been fueling this last leg of the rally – emotional money.

You see, mutual funds, the favored vehicles of emotion-driven retail investors, have experienced 30 straight weeks of inflows. The Investment Company Institute has tracked a total inflow of $316 billion in the past eight months. The charge is on and any downturn could spark a quick flight from these funds.

You’ve seen what $300 billion of buying can do to push stocks up. There’s no reason to expect a similar sized drawdown to have the same effect, only in the inverse.

For now though, the trend is up, the herd continues to take money off the sidelines and throw it into markets, and the bulls have been able to stampede over any significant bad news. Still though, I recommend taking action of a different sort today.