"Economic growth will average three percent or more through at least 2015, according to the median response of 47 forecasters surveyed by the National Association for Business Economics (NABE)," Samuelson writes. "Consumer spending, housing construction and business investment will expand. The unemployment rate, 6.3% in May, will drop to 5.8% by year-end 2015.

Samuelson adds that "Mark Zandi of Moody's Analytics doubts the bond market is warning of a weaker economy. Zandi instead argues that the low interest rates result from a recent proposal by the Federal Reserve requiring banks to hold more "liquid assets" as a way of defusing future financial crises.

In the end, Samuelson argues that "the stock market's optimism trumps the bond market's (possible) doubt. Or does it? Could the economy disappoint again?"

Though it raises interesting points, the story should have most investors scratching their heads.

Meanwhile, E.S. Browning, the Wall Street Journal's veteran markets writer, suggests that "money managers and analysts are beginning to talk about an idea that dates from the roaring '90s: a rapid stock gain known as a melt-up."
Browning defines a "melt up" as a sudden double-digit percentage rise that often follows months of positive stock returns. "In late 1999 and early 2000, the Nasdaq Composite Index surged to 5000 from 3000 amid the Internet frenzy. It then collapsed," he writes.

"Now, Michael Hartnett, chief investment strategist at Bank of America Merrill Lynch, is warning clients that the market could see 'an unhealthy, speculative increase in asset prices,' which would leave stocks and bonds both vulnerable to sharp declines," Browning writes.

But Browning concedes that such events rarely happen when people are worried about them. "It is when people forget their concerns and go for broke that markets get in trouble," he adds.

At the end of the day, what's a reader to conclude? Should one alter one's investment strategy based on the possibility of a "melt up?"

It's not having that effect on me.

I'll close this column with a critical look at the most widely used investment yardstick of fundamental analysis: the simple price-to-earnings ratio.

For decades, investors have used the relationship between a stock's price and either a year or trailing earnings, or a year of estimated "forward" earnings to help determine whether a stock is overvalued or undervalued.

But an article in the Financial Times quotes a recent study by BCA Research that makes a solid case against a simple P/E ratio.

"A company's equity is not just a claim on the next 12 months of earnings," according to the study. "It is a claim on a long stream of future cash flows. Therefore, the forward PE is a meaningful measure of value only if next year's earnings forecastassuming it turns out correct – is a representative statistic for what investors will receive over an extended period of time. However, it rarely is a representative statistic.

"The first flaw is that the forward PE takes no account of whether the 12-month forward earnings are near the business cycle peak, and therefore unsustainable, or near the business cycle trough, and therefore likely to grow rapidly. The second flaw is that the forward PE takes no account of whether the profit margins embedded in the earnings are structurally high, and so likely to trend down, or structurally low and likely to trend up."