When I see the S&P and other world markets at current levels, part of me thinks back to 1987.
The trouble is, world economies in 1987 were in a much stronger economic and financial position.
Take the US: real GDP growth in the quarters leading up to Q1 1987 was stronger than those leading up to Q1 2013.
Not the red line is to Q1 1987 and then to Q1 1989. Personal consumption expenditure in Q1 1987 was 65% of GDP versus 70% today, and household and NPO debt to GDP was some 59% as opposed to the current 85% . Real personal disposable income growth had also been materially higher.
Yes of course interest rates were higher, but we were in the midst of the great re-leveraging accompanied by falling interest rates and inflation.
There are many other facts that need to be taken into consideration before getting taken away with current market levels. I can see why short term players who see opportunities in short term quantitative easing may wish to get involved, but I am expressing considerable concern over risks to longer term returns for those who depend on their risky assets far into the future.
For a good read of the actual events of October 1987, please see: A Brief History of the 1987 Stock Market Crash with a Discussion of the Federal Reserve Response