New Market Benchmarks Show a Lack of Options
They are also very expensive — well into the 90th percentile on a historic basis — according to several other metrics, including price-to-sales and price-to-book ratios, he said. If stock market participants believed that the Fed was about to alter its policy — and bond yields were going to rise sharply in the near future — then there might well be a flight from the stock market, he said. "We're re-evaluating our position week to week," he said.
On Monday, the Dow closed up 14.32 points, or 0.09 percent, to 15,976.02, while the S.&P. 500 fell 6.65 points, or 0.37 percent, to 1,791.53. The Nasdaq composite index also fell, by 36.90 points, or 0.93 percent, to 3,949.07.
Tim Hayes, chief global investment strategist for Ned Davis Research in Venice, Fla., said that he expected global stock markets to remain in an upward trend for the next few months. But then, he said, "with valuations getting stretched and monetary conditions becoming less favorable, there are, unfortunately, high probabilities that there will be a serious correction next year."
(Read more: Buffett Still Sees 'Good Value' in Stocks)
Longer term, however, Mr. Hayes said, once that battering is over, the bull market is likely to resume.
Mr. Kleintop said that for the market to keep climbing, it's important that "the economy start growing a little faster," adding, "I think it can do that."
Still, he said, it's quite possible that investors who jump into the market now might experience an immediate 10 to 15 percent decline, one that is probably overdue in a bull market of this duration.
"It would be unfortunate," he said, "if people who have stayed out of the market see the momentum, come in and get hurt. You'd hate to see that happen, but people should know that it could."
—By Jeff Sommer of The New York Times.