There are more hints of an inflated run-up in U.S. stock prices. That could be a more serious threat than any geopolitical blowup to my prediction that the secular bull market could run for another two years or longer. The forward valuation multiples of the S&P 500/400/600 are now at bull-market highs and slightly exceed the 2007 highs of the previous bull market. On March 4, the forward price/earnings ratios of the three S&P composites rose to 15.4, 17.7 and 19.1, respectively.
Bullish sentiment has rebounded sharply during the past few weeks. The Bull/Bear Ratio compiled by Investors Intelligence fell from a recent high of 4.23 during the week of Dec. 24 to 2.40 during the week of Feb. 11. Over the past three weeks, it has bounced back to 3.62.
Source: Ed Yardeni — Ed Yardeni is the president and chief investment strategist of Yardeni Research Inc., a provider of independent investment strategy and economics research for institutional investors.