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The key, in my opinion, is the model used to approach investing in companies. I don't think Warren Buffett would ever start his analysis of whether to invest in companies by asking if the market is fairly priced. In fact, I believe one of his central messages to investors who choose to invest in individual stocks (which most people on this board obviously do) is to largely ignore the price of the market. Instead, focus only on the individual company at issue and whether it is selling at a discount to its fair value. Of course, when the market is at or above fair value, the universe of stocks that are selling at a discount shrinks. Thus, I think it is a good time to be bullish only to the extent that you can identify great companies selling at a discount. To me, there are fewer of these companies that exist now --with the market run up -- than in the last year and a half at least. Thus, I find it hard to argue that now is a better time to be bullish than three months ago.

I think people who focus on the price of the market or the momentum of the market make the mistake of assuming the underlying company of interest has become more valuable simply because the market has risen.


P.S. - as far as models for investing go, I think the best approach for individual investors constrained by time is described in Robert Hagstrom's books The Warren Buffett Portfolio and The Essential Buffett. I think a great resource for finding stocks and developing a way of thinking is to read anything by Bill Miller, who runs Legg Mason's Value and Opportunity Trust(his recent comments in the funds' quarterly reports are interesting). Note his investment in LVLT stock and bonds in the Opportunity Trust, interesting.
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