Referring to this $70 number, some Minyanville readers asked what I was smoking. The answer is twofold: First, I don’t smoke. Second, $70 is what the market says will occur, which isn't a matter of opinion.

As I discussed last week, playing the valuation game means heeding the message of the market, or putting the valuation horse where it belongs: in front of the valuation cart. No smoke, no mirrors -- only an objective assessment of the message of the market. As for what Goldman and Ms. Cohen are smoking, you’ll have to ask them.

There's a second issue I wish to raise in regard to Goldman's numbers: the role key influencers on the market have on other participants.

Keynes once said: “Worldly wisdom teaches that it is better for the reputation to fail conventionally than to succeed unconventionally." In large part, Keynes was saying that it's bad for your career's health if you stand on your own and hold unique opinions.

If you can point to someone with a substantial reputation -- say, Goldman Sachs -- then if you're wrong, you’re in good company. This is CYA in action. And it's how the world works.

Since much of investing is a lemming-like momentum game, follow-the-leader is also good for career preservation. After all, investing is a relative performance game. If everyone's headed off the cliff, who’s going to fault the hapless lemming? This also explains much of the closet indexing that takes place among many professional investors.

I'm not bemoaning the fact that key influencers have such clout; I'm simply acknowledging it. This is also something investors should seek to exploit whenever possible, starting with identifying the key influencers, such as Goldman, and the bumpy-road-to-the-new-normal boys over at PIMCO. It's important to learn what they're saying, not just for the knowledge they may impart, but to learn what others are prone to think. Think CYA more than CFA.

Investment Strategy Implications

In my blog post yesterday, I referred to valuation points made here and previously and tied them to the earnings reports from second quarter, which will kick in next month. Since we're in the pre-announcement period, investors should be alert for any early warnings signs that earnings will be at or below expectations. Only at-earnings- or above-earnings reports will provide the fundamental juice to power stocks higher from currently fully valued levels.