This is the argument put forth for purchasing stocks at current prices
"The fundamentalists say: 'Look, 72% of companies reporting results this quarter have exceeded profit forecasts. The current consensus for the S&P 500 companies' earnings this year is over $97, leaving the market multiple at an undemanding 13.5 times. Companies are packed with cash, the economic recovery is finding traction and high profit margins seem sustainable. Sure, we should see some pullback as the pace of earnings outperformance wanes, but the underpinnings are solid.'"
Santoli, Michael, 2011. Ready for a breather. Barron's, Feb. 5.
Though this is a powerful argument based on fundamental analysis, it somewhat overlooks the that companies are holding so much cash because management continues to see a weakened consumer and out front uncertainty. It also neglects the action of the Fed, which has pumped a great deal of liquidity into equity markets but not industry.
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