Ryan, Maserati, and agip:
Good comments. My view has always been that investing in stocks and bonds, or anything really, should be based on some measure of cash flow. The historical average GAAP PE of the S&P 500 is about 15. Current GAAP EPS is around $90 per share. Fair value calculation would be 15 x 90 = 1,350. At a 2.4% Yield the 10 Year Treasury is trading on a cash flow basis slightly ahead of inflation.
So, as Maserati correctly noted, securities are being traded with little regard to valuation. Hot potatoes passed around in a chain. Only a few question the possibility it might be a giant Ponzi scheme. However Ryan shows the duplicity of the Wall Street narrative and facts.
Markets are more interesting at extremes. Expectations for the future are colored by the here and now. For the moment few here can even envision the Dow at 13,000 or a 10 Year Treasury yield at 4%, yet this would be just an average reversion to the mean. Lastly, investors should hope for such a resolution, since that creates real value. At any given point in time someone must hold a security, but at what price?