Can you believe this market? Here we are; Europe's still the mess, we're tiptoeing on the edge of the "fiscal cliff", the economy's barely budging, and stocks are up double digits on the year. So what gives?
The correct answer is simply; buyers have come to the auction at a time when the owners of stocks are fairly content hanging onto their shares. Thus, buyers have to pay up to acquire the positions they're after.
But, given my intro, why on Earth would buyers come to market in the midst of all the uncertainty? I suspect it's because they believe the political ramifications of the death of the Euro and the falling off the "fiscal cliff" are far too great. That currencies will be printed and cans will thus be kicked far enough into the future to allow for some capital gains in the meantime. And they're also keenly aware of the bubble in bonds, the record level of sideline cash, the pristineness of corporate balance sheets, the retail investors' exodus from the market (when they're ready, they'll stampede back), and the compelling valuations of share prices (relative to forward earnings).
Of course this doesn't mean the market, while climbing this wall of worry, doesn't slip off a few ledges in the months ahead. I'll bet it does, but I'll never try to time it (other than through rebalancing).