Ha, there is nothing in your post that I disagree with. I think the current valuation is fair, and many stocks pay quite decent dividends compared to CDs. The real question is then, looking ahead, are things getting better? I think company profits won't get worse, or mainly, not getting to be in such dire situation as presumed in the March 2009 bottom, even if unemployment remains bad. I keep reminding myself that the market always tries to look ahead. When things don't turn out as bad or rosy as they seem, there are violent corrections.
So, one should always be cautious. Except for the younger members who still have income to keep DCA'ing in the face of a W-shaped recovery, most people here do not have a 100% equity portfolio. We all have various exposures from 40% on up to 70%, if I recall correctly, according to our own risk level. The extreme position of holding all CDs or Treasury has less than 1/5 of the membership here, if I could venture a guess. Some still believe in deflation. I tend to side with Buffet when he said in a recent interview that there is no chance of that.
And by the way, our outlook on the economy tends to be affected by our political inclination. As said in previous posts, some of my close friends hated Clinton when he first took office. Being Libertarians, they believed that he would bring the country to ruinous inflation, hence went to all gold in the early 90s. I won't repeat what happened to their portfolio. I like to take the middle road. Being a centrist, with admittedly a good-sized bias on the conservative side, I still did not think any administration or Congress could totally destroy the US, or the world economy, and kept my stocks.
So, 100% stock or 100% CD or Treasury or 100% gold is never my position. Works for me so far. I am still down 19% from top of market in Oct 2007, but that money, I would never had if I weren't in the market in the first place.
I think that people tend to forget that they are free to manage their money the way they like. So, why do people get hot under the collar? Right or wrong, nobody cares about your money but yourself. My friends went 100% gold. Did I call them stupid and make fun of them? Let me say that we are still good friends, and they have reverted to owning stocks for a few years now, by their own cognizance.
PS. Regarding the Buffet recent interview, he said that we are faced with inflation down the road, but that is the price to pay. He said it was like rescuing a man in quick sand by using a rope to yank him out with a pickup. Sure, he gets dislocated shoulders, but the alternative would be a whole lot worse!
But if the DOW gets close to 10k, I got to believe there will be a pretty big sell off. I'll probably be one of the one's doing the selling.
