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Even with such a sterling set of purchase candidates, though, a word of warning is appropriate. While I'm not a successful market timer, and doubt that any qualify in that role for long, I have never seen so few real bargains in the domestic stock market as is the case today. When this indication of equity overvaluation is coupled with the rather alarming current threats to market stability, from huge debts, to trade imbalances, excessive use of derivatives, an uncertain future value of the dollar, very low savings rates, challenging overseas military commitments, looming drains on the national budget from retiring baby-boomers, the potential for new and even greater terrorist assaults, the likelihood of a squeeze to many facets of our economy from rising interest rates, substantial commodity price inflation, and steadily rising health care costs, I think there is reason to question the sustainability of the bull market surge that began in October, 2002.
Thus, a wiser course than to commit extra cash at this point to the dwindling supply of compelling bargains might be to use such reserves for paying off debt or for investing in money market funds, keeping one's powder dry until, following a fresh, truly major sell-off, one may use it to pick off genuinely wonderful values available in an abundance of low-priced securities.
Yet, with Benjamin Graham before (The Intelligent Investor), I am not confident enough of such a safety-first approach being applicable now (for a new bubble of "irrational exuberance" could persist for several more years before the next big burst) to put all eggs in a money market basket. Perhaps, as he suggested, one should always keep about 50% invested in high quality securities like those in the table.
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