Still in Deflation Camp
I can not make sense of the market rally, but contrary to nonsense adages, like the market has already priced in (fill in the blank), the market constantly undervalues and overvalues businesses and rarely gets it right, but over the long term over priced businesses will collapse and under valued will increase.
Right now I think that two things are perhaps driving the market, the very low yields available, which makes some people make poor decisions, and inflation fears.
On the latter I am still in the deflation camp. John Mauldin really is a common sense must read, imho, and his most recent post, "Make Sure You Get This One Right" gives good arguments to look at.
When I was a young adult the prices of goods relative to income was quite high. Indeed, some goods seem to be the same price today as they were 20 years ago, and some are actually quite a bit cheaper. Meanwhile the cost of goods you need to live, food, energy, accommodations, etc., are all up considerably, far, far in excess of reported price increases.
Already there is deflations, rents are going down, housing is going down and other goods and services are going down as they compete for business. I think longer term prices have to realign themselves to be in better balance. If consumption drives the economy and goods are so cheap, how do the people involved in providing those cheap goods ever make a living so they to can be active in the economy.
There was also a wonderful quote in something I read this week about having patience in the market and sometimes the best place for your cash is just waiting. I am still just waiting.