Investors have to wonder if a 2X return is warranted. The market seems poised to move high, and some forecasters believe it could be up another 20% this year. The S&P PE is just above $24. That's not terribly high by historic standards. Earnings among the companies in the index are expected to rise on balance further this year.
The largest drags on the economy remain joblessness and the housing market. S&P has forecast home prices could drop another 7% to 10% this year. Foreclosures are still near historic highs. Unemployment rates are not likely to improve sharply. Even Federal Reserve Chief Ben Bernanke does not expect a greatly improved job market for another two years. The unemployed remain a problem for consumer confidence and consumer spending.
We still don't know whether there is such a thing as a long-term jobless recovery. If there isn't, the stock market may peak soon.