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Stocks are expensive—but investors ask: So what?

It doesn't matter how you slice it—stocks are getting more expensive. But as markets continue to rise, few investors see cause to ring the alarm bell.

Many market participants seek to measure the attractiveness of stocks by using the price-to-earnings (P/E) ratio, which divides the price of stocks by expected earnings. As of Friday's close, that reading was above 17, just about the highest since mid-2004. This as stocks have been rising over the course of the year even as actual and expected earnings decline.

There are many other ways to value the market as well. But no matter the metric, if "price" is in the numerator, it is likely to look high.

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Take the price-to-sales ratio, for instance. It has risen to 1.8, the highest since the early 2000s, according to FactSet. And in a chart making the rounds on Wall Street, Ned Davis Research points out that the price-to-sales ratio for the median stock in the S&P 500 has risen to the highest value ever (using a data set going back to 1964).

A glance at price-to-book ratios yields a similar conclusion. Tobin's "Q ratio" divides the market price of stocks by total asset value to generate a sort of macro price-to-book measure. And according to Doug Short of Advisor Perspectives, the Q now tells us that stocks are trading 66 percent above average mean replacement cost—higher than ever before save for the tech bubble.

The explanation behind the rise in valuations isn't too complex.

First of all, many investors continue to believe that the economy is slowly picking up steam and will continue to get stronger. More saliently, though, interest rates have been exceedingly low for this stage of economic growth, largely due to the stimulative actions of central banks in the U.S. and abroad.

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In addition to boosting the value of stocks according to popular calculations that use rates to discount future cash flows, the low interest rates also mean that bonds pose an especially unattractive value right now.

"Can the run in stocks continue? Abso-freaking-loutely it can," commented Jim Iuorio, a Chicago-based trader. "You can look at valuations all you want, but when you turn your attention to anything else—what are you going to buy?"

Investors certainly haven't been spooked by the valuation measures, paying more attention to the Federal Reserve's perceived assurances that they won't rise short-term rate targets anytime soon.

"This week saw a massive amount of cash moving into the S&P 500 after the Fed seemed to take a more dovish stance," according to a Friday report from Chantico Global examining ETF flows.

'Hyper-overpriced'

Not everyone is pleased by such action.

Richard Fisher, the former Dallas Federal Reserve president, said Friday on CNBC that stocks are "hyper-overpriced" and are "vulnerable" to a "significant equity market correction," because "people have gotten lazy. They're totally dependent on the Fed."

But when the rubber meets the road, investors may not really have a choice.

"Earnings multiples are still modest relative to alternatives," said Albert Brenner, who leads the asset allocation team at People's United Wealth Management.

In fact, given where bond yields are, "we would expect P/E multiples to be even higher in a normal environment—if you could imagine a normal environment with the ten-year rate below 2 percent."

Brenner is now telling clients that "the likelihood of a correction is greater now than it has been over the course over the last several years, simply because of uncertainties in the market."

But he adds that his firm still remains overweight American stocks—as it has been for the past several years.

—By CNBC's Alex Rosenberg.

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