Nov. 3--Our retirement portfolios would be in sweet shape, regardless of the volatile stock market, were they full of Hawkins Chemical, the southeast Minneapolis manufacturer that can boast a great return for shareholders over the last several years while paying its executives modestly.

Hawkins is up about 40 percent over the past two years, an anomaly for many investors who have seen their equity portfolios sliced in half from October 2007 through March 2009.

But the good news for investors is that the stock market has rebounded. And there may be more to come.

The Bloomberg-Star Tribune index of Minnesota's 100 largest public companies, including Hawkins, has posted total returns so far this year, including dividends, of 19.0 percent. That compares with 17.8 percent for the S&P 500 and 14 percent for the Russell 2000 index of small-capitalization companies.

Big Minnesota gainers, up 50 percent or more this year, include Health Fitness Corp, the operator of worksite fitness centers and health programs; Winmark Corp., parent of Play It Again Sports and other retailers of used merchandise; health club operator Life Time Fitness; Tennant Co., the maker of office and street-cleaning equipment; and Ameriprise Financial, the best performer among Minnesota financial stocks.

That said, we're still far off the highs of 2007 and far from a humming economy.

All the same, the doomsayers who predicted economic apocalypse last year are crowing less. The economy grew at a 3.5 percent rate in the third quarter, aided by federal stimulus spending and car discounts. And a stock market surge that pushed the Dow Jones industrial average above 10,000 last month has put the bears in their dens for now.

"We see potential for the rally to continue," said Doug Ramsey, research director at the Leuthold Group, which has a record of going bearish before periods of market euphoria. "Large-capitalization stocks are about at fair value. As the economy and sentiment improve, there's nothing to say they can't go above fair value."

Leuthold estimates "normalized" Standard & Poor's 500 earnings of about $65 next year, which means the S&P index trades at about 16 times earnings -- about average. During bull markets, it has traded at well over 20 times earnings for extended periods.

Leuthold, which is maintaining the maximum 70 percent in stocks in its Leuthold Core and Leuthold Asset Allocation mutual funds, will tell investors later this week in its November market update that the signals it watches are still positive, including the fact that most investors are still skeptical.