On a non-emotional level, many of us would agree that, from a fundamentals basis and on an historical basis0, much of the American equity market is overvalued. This is underpinned by a growing debt overhang.

So, the question begs - why does the equity market keep rising beyond the point when the projected profit and cash flow has little probability (in the absence of significant inflation) of justifying current prices by projected returns.

I have a feeling that psychologically, we respond faster to pressure being released than to it being applied. The past year has been a manic-depressive one with TACO being the word of the day. Each time the market responds to a threat, it seems to bounce back further than its previous limit when the pressure is relieved. It has little to do with value and everything to do with the psychology of human nature.

Of course this could be completely bogus.

Jeff