The Week Ahead: This Head-Scratching Rally

The stock-market rally continued last week, with the S&P 500 climbing more than 1%, bringing the year-to-date return to just over 14.5%. This has some folks beginning to scratch their heads. The S&P is now at new highs as it trades at a 12-month forward price-to-earnings ratio of just over 14x -- yet individual investors are getting ever more bullish on the market.

Not only that, but they have ratcheted up margin debt as well. At the end of March, the most recent data, investors carried $379.5 billion in margin debt at New York Stock Exchange member firms. That's rather shy of the record $381.4 billion set in July 2007. Still, interest rates are low, and likely to remain so for some time -- at least around 24 months at current job-creation levels, if you use the Federal Reserve Bank of Atlanta's job calculator. Given this, and the climbing stock market, it stands to reason that more people are turning toward the market if only so they won't be left out. ...519 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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