The median price/earnings ratio of the Russell 3000 is currently 16.6x 2010 earnings.  The median forward PE for the Russell 1000 is 16.8x.  The median forward PE for the Russell 2000 is 16.5x.

The long-term average forward PE is 14x.  Thus, the average stock is somewhat expensive but not egregiously so.

However, profit margins are above long-term averages.  If profit margins revert to mean, then stocks are more expensive than they appear. 

Margins matter more in the long-run than the short-run, though.  Thus, over the near-term, valuation is not worrisome.

Byron Wein once called Europe an "open-air museum."  It is hard not to see why.

The market goes up almost every day.  Any dips are frantically bought.  Marketwatch notes that the buying power is extremely strong.  Until this condition changes, the market is going higher and declines will be limited.

What I have in mind is a rare buy signal that was generated a couple of weeks ago by a trend-following indicator with a good long-term record. Prior to the recent buy signal, there had been only 12 of them since 1967.

This is from earlier in the week, but it explains why the market goes up every day.

A gauge of the U.S. economy's prospects rose more strongly than expected to a record high in March, pointing to a steady economic recovery, a private research group said on Monday.

From The Wall Street Journal

Today, the Bank of Canada signaled that it will soon start increasing interest rates.

The Bank of Canada is sending a clear message that interest rates could rise as early as June, signalling a turning point in the recovery and triggering a debate on how fast and how high rates will move.

We have been talking about the nuttiness of Canada's real estate for some time, most recently here. 

There is nowhere more nutty than Vancouver, and it is demonstrating the classic signs of a bubble, including frantic panic buying.  

With the average price of a house in Vancouver over $1 million these days, its difficult to know if you are buying a crackshack or a mansion?

Er, we might have to revise the legend.

From Tom Toles.