NEW YORK (CNN/Money) - Remember where you were a year ago today? For some investors the answer is easy: Rocking back and forth in the fetal position under their desks, trying to think happy thoughts about what it was like before the big bad bear came and ruined everything.
Yes, it was one year ago Thursday that the market hit its nadir -- not that many people knew that at the time. (Life lesson: Never trust anyone who tells you they bought at the bottom.) Indeed, it looked like the financial markets were coming apart at the seams.
Shaken by the financial scandals that had come out through the year, investors had little faith in Corporate America's book keeping anymore. As a result, the corporate bond market more or less shut down -- meaning that many companies were locked out of the financing they badly needed. Without financing, their futures were in doubt; with their futures in doubt they were even less likely to get financing.
The fear reached a fever pitch and then, just like that, it passed and the market started going up again. At first, most people thought they were just seeing an oversold bounce. Then they thought it was just a bear market rally. Nowadays, optimists say that it's a brand new bull market and pessimists say it's a "cyclical bull market within a secular bear market."
Whatever it is, for investors it's been nice. The Dow has risen 32.3 percent since Oct. 9 last year, the S&P 500 is up 33.1 percent and the Nasdaq is up a whopping 70 percent.
It's a rally that has given rise to a number of concerns. First off, the stocks that have done best aren't exactly what you would call high quality names. Stocks that were at $5 a year ago have done better than stocks that were at $10. Stocks that were at $10 have done better than ones that were at $15. The best performing stock in the S&P 500 over the year has been Corning, which is up 763 percent. It trades at 76 times expected earnings. (And based on the past year, it has no P/E, since it lost money.)
Indeed, prices in general seem rich. The S&P trades at more than 20 times the past year's earnings -- a high level historically. A year ago its P/E was 17.4. Earnings will have to grow at a very good clip over the next couple of years to justify today's prices.
But let's lay those concerns aside for the moment, and wish the bull, whatever his qualities are, a happy birthday. And many happy returns.
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