To put "cheapness" into perspective, its the stock market return minus the risk free return which in this case the risk free return is less than 2% (treasuries) which is negated if you take into consideration inflation (not excluding food and energy). So, you really have no choice but to be in the stock market even if your risk is to lose 50% of your money.
Its a horrible situation indeed. Corporations have a major advantage and can be extra selective with employees and though sales seem to be falling, earnings are increasing? Labor is cheap and the efficiencies that were created just to survive in the great recession are now paying huge dividends--employees are simply doing more with less.
In other words, its time to be cautious. You have to be in, no matter what unless you want a negative return on your cash; but does that mean throw all your money into stocks if you haven't already done so?
Lets take a look at the shell game the FED is doing with our currency. They are buying in total roughly 4,000,000,000,000.00 in Quantitative Easing instruments. The U.S. is arguably the single largest holder of U.S. debt. The funny thing about this is that we print money to pay the FED and SSA and then they give that money back to the U.S. government to pay down the debt! Its an awesome display of fiat currency at work.
All in all, we are in a massive bull market. No question, but like all monster bull markets, they do come at a cost. When professionals are in control of the markets there is little to no panic. They know that markets will fluctuate and don't need to sell and so you will get shallow sell-offs and then consolidation and then another leg up. When everyone on the planet has to be in the stock market to get a decent yield, things aren't so managed when bad news hits.
Be on the look out for articles by major news papers that say "Everyone is in the stock market, brace for Dow 40,000" as this is a good sign that everyone is in the market and the slightest hiccup will have those some investors running for the door, because unlike the professionals, they actually need that money!
