Let's get real about the stock market puts all the recent records in perspective. For non-economists the 'real' is a play on the important adjustment for inflation.
He also uses the Graham/Shiller P/E to put the price in context of the (past) long-term earnings. It is one of relative few metrics I value for a few reasons I have outlined in the past. For obious reasons he will tend in the long run to hover above the current P/E...
Buffett pretty much said the same thing last week underlining especially the part about the retained earnings. So should you invest now in stocks? Just like pretty much everbody else I have no idea. I will continue to sell bonds and have not bought a new one in the last 3 years or so. Too much risk IMHO as someday you will have higher yields and thus in the long run bond prices will come down. Hopefully we won't all be dead...
I enjoyed this post about why old hedge fund managers hate Ben Bernanke. Luckily I did change my views on inflation within a liquidity trap, after having faced the facts. I would be quite a bit poorer today and have much less faith in ordinary macro textbooks...
Hedge funds are doing badly in this rising-tide-lifts-all-boats market, and they feel that they would be outperforming if the Fed just let things collapse, and they could swoop in when prices "clear."
The inflation and hyperinflation fantasies are another important aspect here. A lot of these guys cut their teeth during the 80s, when inflation was the enemy, and Volcker was a hero for fighting it. Thus being anti-inflation is kind of a nostalgia trip for them. Also in general, the older people are, the more worried they are about inflation. Also the older people are, the more they are inclined to invest in bonds and risk-free assets, so low rates aren't fun.
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