I may not be a passionate fan when it comes to America’s pastime. Still, baseball is serving up a seventh game of a World Series. It rarely gets better than that.

Who would have believed that the Los Angeles Dodgers would be one win away from celebrating their greatest wire-to-wire season since Kirk Gibson’s 1988 team? Who would have imagined that the Houston Astros would be poised to claim their first World Series title in franchise history?

In a similar vein of implausibility, when it comes to stocks like Amazon (AMZN), you just have to tip your cap. Here is a mammoth mega-cap with a P/E (TTM) of 280, a Forward P/E of 140, and a price-to-book of 23. Yet nobody dares short the dynamic ‘disruptor.’ What’s more, the financial media fawn over non-existent earnings growth when the company ‘blows away’ sharply lowered expectations.

One year ago, the consensus forecast for Amazon’s (AMZN) Q3 2017 earnings per share was $2. (See the chart below.) By the start of this year, Amazon was supposed to provide $1.50 per share in the third quarter.

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As recently as 3 months ago, the forecasts still called for $1 in Amazon’s (AMZN) earnings picture. Then, roughly one month ago, the consensus dropped all the way down to $0.05 for Q3. Let that sink in for a moment. $2, $1.50, $1, $.05.

When Bezos’ behemoth reported its phenomenal earnings ‘beat’ of $0.52 last week, investors celebrated by sending the stock price up more than 13%. That’s the same unremarkable $0.52 as the previous year. And it is pennies compared to what the corporation had been projected to produce 12 months earlier.

Sometimes, you just have to tip your cap.

Perhaps it is unfair to call out Amazon on its unimpressive profits-per-share picture. In truth, earnings have not been the driver of asset price appreciation for quite some time. When stocks climb 35%-36% over a period of three years and ten months, yet reported earnings move a measly 2%-3%, there are other forces at play.

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Some of the forces at play have been well-documented. For instance, central banks across the world continue to create an unparalleled amount of electronic money credits for asset purchasing (a.k.a. ‘QE’ or ‘quantitative easing’). Key interest rates like the 10-year Treasury have remained relatively low; the benchmark has stayed within a 2.0%-2.5% range throughout 2017. Meanwhile, the investment community is thrilled with the prospect of corporate tax cuts.

While those tailwinds have been spectacular for riskier assets, the lack of concern on everything from extreme valuations to the possibility of monetary policy error to ‘peak confidence’ is disconcerting. Sixty-five percent of Americans believe that stocks will rise over the next 12 months. That represents a record level of optimism. Additionally, the Conference Board’s Consumer Confidence Index resides at its highest level since the year 2000.

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Perhaps unfortunately, confidence tends to ‘top out’ before economic downturns. And even though nobody seems to believe that one is coming, a number of indicators have been noticeably discouraging. Job growth has slowed dramatically since peaking in January of 2015. Meanwhile, inflation-adjusted spending has been outpacing inflation-adjusted disposable income since the start of 2016.

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My participation in the stock uptrend has been defensive for several years. A 50% allocation to exchange-traded stock trackers like Vanguard Large Cap Growth (VUG) and iShares MSCI USA Quality Factor (QUAL) has organically pushed the mix up to 55%. Granted, I may not reduce my stake in equities until the monthly close on the 10-month SMA falls below its trendline. That said, I am not putting the 20%-25% cash equivalents back to work either.

Consider the all-time low for the Equal Weight NASDAQ 100 as it relates to the PowerShares NASDAQ 100 Trust (QQQ). As technician Dana Lyons points out, the relative low only goes back to 2006. Nevertheless, if the hallmark of an early stage bull market is widespread participation by all stock components, then what message is being sent when an index is being carried by only a handful of heavyweights (e.g., Microsoft (MSFT), Amazon (AMZN), Google (GOOG), etc.)?

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The same discrepancy can bee seen between Guggenheim Equal Weight (RSP) and the S&P 500 SPDR Trust (SPY).

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In a final note of caution, get a gander at the number of S&P 500 stocks that trade at a ludicrous price-to-sales (P/S) multiple over 10. At the pinnacle of dot-com euphoria in March of 2000, there were 29 S&P 500 stocks trading in that stratosphere. Today, there are 28 of them, including Facebook (FB) at 15.8.(This time is different?)

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