Stock market situation...

The P/E ratio on the Dow Jones Wilshire 5000 index, which
includes all stocks of companies based in the United States, was
19.5 at the end of 2006, according to Wilshire Associates, just
above its annual average of 19.3 since 1979. So valuations do not
have that far to rise before they could become a worry.
Jeremy J. Siegel, the Russell E. Palmer Professor of Finance at
the Wharton School of the University of Pennsylvania and the author
of the influential book Stocks for the Long Run, expects the
real, or after-inflation, compound annual rate of total return to
fall to 6 percent, a full percentage point below the real return
since World War II and less than half the real compound annual
rate of return of 14.8 percent from 1982 through 1999. And he
acknowledged in an e-mail interview that the real return could
fall lower.
In dollars, this downshift in returns since the 1990s means
that a portfolio invested all in stocks would have a 8.5 percent
nominal return, which is Siegel’s 6 percent prediction for the afterinflation
return, with 2.5 percentage points of inflation added
on. It would take eight and a half years for the portfolio to double
in size. At 6.5 percent, including inflation, a much more pessimistic
assumption, the portfolio would take 11 years to double
in size.