question about stocks

Javelin made an interesting statement in a post below. He said stocks have fully priced in a recovery, and I would agree this is more than true. But what I think he meant is that they have priced in accelerated earnings growth into the indefinite future, given some reasonable relationship of discounted earnings to interest rates.


What I don't think Javelin meant is that they have priced in a recovery in the ridiculous demand to invest we saw in early 1998 and early 1999, for instance. And so my question is, what is to stop stocks from trading way ahead of earnings, even if earnings do pick up? Is it just because the venture capital machine is waiting to be kicked back into gear, is it because so many companies are eager to sell more equity?


Why should stocks stop going up here, this time, when they didn't last time?


eLROY


P.S. I am itching to predict Nasdaq 4,000 - and then a drop back to these levels - but I'm not ready to do it yet.