Musings of the Market

Although the economy is picking up and starting to come out of the recession.  I'm predicting a drop in Market Value for the following reasons:

• The Current market PE of 23.5 seems higher then the long term average: which I think is like 14 or 16  (economist).
• Government debt is at an all time high, meaning they'll have to spend less in the future to balance the budget which reduces demand.
• Companies are buying back shares in large numbers to prop up their stock prices.  The percentage of reinvested funds is the lowest it's been for 30 years (economist magazine).  Instead of reinvesting the money businesses are earning, they are buying back stocks.
• Funds like Hathaway are dumping stocks.

I'm surprised the stock market could rally as high as it has, under the above conditions.  Are we in another period of irrational exuberance.