On a decade-by-decade basis, the years ending in 8, 9 & 0 tend to be the most bullish. You may want to revise higher.
Fair value lies in the eye of the beholder. If something is more expensive than what I consider fair value doesn't in turn mean it is in a pricing bubble that is bound to pop.
LOL! Fair value? The DJIA at a 70+ P/E? And you guys contemplate a few percent here and there? This is a bubble in equities and the only question is can it be sustained until corporate earnings rise back up to a level where these prices will be in the vicinity of sane.
Dow PE at 70+? Where you get this info? From Hugo Chavez? http://finance.yahoo.com/q?s=DIA Clearly shows PE at 12.2
Dow Industrial 87.34 Nasdaq Composite 31.50 Russell 2000 66.20 S&P 500 23.80 http://online.wsj.com/mdc/public/page/2_3021-peyield.html?mod=topnav_2_3000
I'm sorry, but this is why ET has become so ridiculously absurd. Why would anyone want to use a trailing P/E on the market? Ever heard of P/E compression? The market is a huge discount "machine". A "trailing" P/E number ( as you have posted ) is totally worthless.
Both are strong arguments. First, yes, the only alternative to American equities are American bonds. And second, yes, showing the Diamond trust numbers is totally relevant. However, earnings for the DJIA fell from $226.02 to $185.64. Now you have to have a phd in math for the next step: derive from above number the price/earnings ratio for the DJIA. I'll let you do it. And also, I have to admit: merely mentioning the name Hugo Chavez pushes me into a foaming shiver. Hydrophobia or something...