Supply and demand is all that counts. There is no correct valuation. All valuations are subjective. Historic valuations are meaningless since there are so many more people in the market today and more every day as the Chinese, Russians and Indians start buying on top of all the new buyers from the US.
For those that insist on P/Es and 'realistic valuations' they can always get out of stocks and wait for them to get lower and invest in bonds or money market accounts.
As for stocks there is absolutely no reason why the price of stocks should be indepedent of the rules of supply and demand.
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