STOCK MARKET, IS THE TIMING RIGHT NOW?

I've done a lot of reading and thinking lately. I think I can explain why the market hasn't moved up a lot in the last ten years. In fact, Microsoft might be a microcosm of the "why" behind this schlerotic market. I've stated repeatedly the observation that Microsoft (MSFT) is flat. It's been between $24 and $28 steadily for over this ten year stretch. Why?

So I'm reading everything I can get on this topic. I'm interested because the main focus of my endeavors is to write covered calls to generate income. If a stock is flat--perceived as going nowhere--the options are weak. To sell them you generate very little in premium. For example, a robust stock at $25 might have an October premium at $1.80. Even some stocks have option premiums near 10% of the stock price. Microsoft's option is 25 cents or 40 cents. That says no one thinks the stock is going anywhere. And for the time being, they're right. What would drive Microsoft up? It's one of the best run companies in the country. They make millions. I mean tens of millions---everyday. More on this after I make a macro case for the market.
One could look at the market in general---either the Dow 30 or even the S & P 500---over the last 5 years and it looks like one of my rolling stocks.

Right now there are 22 of the S & P 500 with stocks at a lower price than where they were ten years ago. Look at just a few of them:

STOCK/TCKER                 PRICE 8-29-01        PRICE 8-29-11             RECENT P/E

BestBuy/BBY                             $26.86                     $25.43                          7.3
Nvidia/NVDA                              14.05                       13.36                         13.3
Cisco Systems/CSCO                   17.08                       15.74                          9.2
Texas Inst/TXN                            34.05                       26.16                        11.2
Capital One/COF                          56.68                       45.39                          6.3
MIcrosoft/MSFT                           27.11                       25.84                          9.3
Xilinx/XLNX                                37.95                       31.21                        14.5
Kla-Tencor/KLAC                        49.75                       36.86                          9.0
JPMorgan Chase/JPM                   39.57                       37.64                          7.5
Dell/DELL                                    21.80                       14.97                           7.4
H & R Block/HRB                        19.45                       14.95                           9.1
Gap/GPS                                        19.70                      16.74                          11.0
Intel/INTC                                      28.1                        20.30                           8.5

Others include: FRX, AMGN, KSS, MDT, DOW, TSS, WHR, PAYX. (Source: Bespoke Investment Group)
This is amazing group of stocks. Let me weigh in on a few possible reasons for this and a few possible plays:
1) These are huge companies. They are worth billions of dollars. They have billions of shares outstanding. For example, anyone who wants to own Microsoft already owns it. What could they do to make more people want to buy their stock? Could they make another deal, say with some Chinese companies? That they are doing. Could they make more profits? That they are doing, quite robustly. Stocks are subject to rules, one being the law of supply and demand. They have a lot of supply, but right now the demand is not there.
2) One reason these stocks have not gone up is that they were too high ten years ago. We were at the end of the dot-com bubble. P/E ratios back then were 37 times, 68 times and 124 times earnings. I remember one stock at 2200 times earnings. Some were at N/A. There were no earnings. P/E is a division formula. You can't divide by zero. In a way E-Commerce took the E out of P/E. We've come a long way, but the stock prices lag.
3) Speaking of high and low P/Es. Look at the right hand column. Traditional P/Es, even for these high rollers is around 20 to 30 times earnings. A quick one sentence lesson on P/Es. The P/E number states how much money it costs to buy one dollar of earnings. If a company today has a P/E of 9.3, like Microsoft, it means you're paying $9.30 to get at $1 of profits. I remember when MSFT had a P/E of 35. And that was considered okay.
4) Everything returns to the NORM---meaning normal. If stocks typically trade at 19.2 times earnings, then sooner or later that ratio will return. Earnings will either go up to match up and justify the high ratio (making it normal) or the stock price will come down (making it normal). If you have $100,000 in the bank and earn a 3% interest, or $3,000 for the year, you have a P/E of 33 plus. It costs $33 to get at one dollar of earnings. If you get 5% interest, your P/E is 20 ($100,000 divided by $5,000 equals 20). See how simple it is. This bank example is important, because in some ways it's a good measuring stick. The hope of stock investing is not always to capture the income, but to have the stock increase in value.
5) Scan your eyeballs down the right column and you'll see some tremendously low P/Es. These stocks still may take years to go up substantially, but they are making money---lots of it---and even today a higher price is justified. For example, Microsoft could have a P/E of 27 (Three times nine) and the stock would be at three times its current $25, or $75. If it were there it would seem natural.
6) I think there are some good prospects. Now I'm going to look at book value, and see if any of these have a negative book value, making them even more tempting. Whirlpool, Gap and Computer Sciences look like good takeover candidates.
7) I like covered calls, in the 6% to 10% monthly cash flow range. Most of these are in the 5% range, and though good, there might be better cash flow stocks. Dell was at $14.02 today. The September $14 calls were 39 X 40 cents, 39 cents to sell. The October $14 calls were 88 cents to sell, or $880 if you had 1,000 shares. The $15 calls were 44 cents to sell.
8) Many of these stocks have a 2% plus dividend yield. They also have stong balance sheets, with most holding $4 to $6 per share in cash.
Years ago these stocks were firmly in the growth sector. Today they are defined as value stocks. I like the future of these companies, and I love the future of America, no matter the Liberal machinations to devalue our country and economy.