Wintertime, and the livin’ is easy. Valuations are high, the bulk of earnings season is behind us, and hope for the new year remains strong. At seven worries, we are officially in the complacency zone. The stock market is interpreting all news as good news. If by rare chance a stock’s price drops too low, not to fear: It will get acquired faster than you can say “LBO.” Not surprisingly, cheap stocks are getting tough to find, so patience is required. Looking ahead, several potentially market-disturbing issues are gathering force: the threat of policy change in China, which rocked markets in Shanghai and around the world; simultaneous escalation of war in Iraq and Afghanistan; an increasing number of delinquencies in the subprime mortgage market; and hearty Russian chest pounding, to post a few.
