I look at a variety of stock market valuation methodologies.  Below are several, but I look at many others as well to get a sense of valuation.  Of course, valuation means absolutely nothing in the near-term.  It is, however, the single biggest determinant of long-term returns in the stock market. 

Assuming, of course, we do not go the way of Argentina.

One of the many negative ramifications of the Fed’s grossly incompetent monetary policy over the past few decades has been to reward speculators and punish savers.  Charles Schwab makes this point, only in a much nicer way, in today’s Wall Street Journal.

There are two reasons why the market is screaming higher – enormous liquidity and an improving economy.

An ocean of liquidity has flooded the markets, thanks primarily to the Federal Reserve and government programs.  One can either surf the ocean (by going long) or drown in it (by going short).  The tricky part is getting safely to shore on the surfboard when the tide goes out. 

If the month were to end today, the Russell 2000 would be up 9.8% in March.This would be the 11th strongest month since 1980, in the 97th percentile of monthly performance.

The question is, what now? 

In November, I closed on a piece of land.  The property is beautiful and quiet, albeit a bit small.  It is in a small subdivision with 10 other properties.  Four properties have been built.  I have no deadline to build.  There is a swimming pool in the common area and the small subdivision road is made of cobblestone.  It is two blocks from a very trendy area where everyone wants to be.