Even with the little setbacks we’ve had in the last week or so, I still believe we are in the first phase of an equity bull market. We haven’t really had one in a while; not since March of 2000, in truth.

The run-up in stock prices that ended last year was based on earnings increases, not on price-earnings multiples. Profit margins were at very high levels – but they didn’t inspire conviction. The leverage that speculative capital went for in the last cycle was the financial leverage available to players such as credit hedge funds, or property owners, not the operating leverage that comes from being on the lowest level of a corporation’s cash waterfall.