In today's potentially ultra-slow-growth "New Normal" economy, old stock market multiples do not apply.

In fact, investors who rely on long-held rules about Price/Earnings (P/E) ratios when they buy and sell stocks are risking a pretty big "haircut:" They may be overvaluing some of their stocks - and the stock market in general - by 17% to 20%.

Recently Barrons asked the question: “Do you believe in technicals or fundamentals?” The article pointed out that while the technical picture looks bullish, the fundamentals remain weak and caution is warranted.

I agree that the technical picture looks quite positive as the bulls seem to have regained their footing. On the other hand, respected investors and analysts such as John Hussman to David Rosenberg have been warning about the deteriorating economic backdrop.

The first estimate of second-quarter GDP growth will be published today, Friday morning. Bloomberg's consensus forecast calls for the U.S. economy to have expanded at a 2.5% pace. The actual reported number will be revised in subsequent reports from the Commerce Department. (First-quarter GDP was 2.7%.)

Many forecasts for the second half of the year call for more of the same. For instance, T. Rowe Price anticipates the economy will expand at a 2.8% rate in the third quarter and a 2.7% rate in the fourth quarter. As you are well aware, there are concerns that the downside risks could make current forecasts too optimistic. The Federal Reserve used the words "slow," "slowly," or "slowed" six times in the abstract of its Beige Book report Wednesday. Dallas Federal Reserve President Richard Fisher predicted in a speech yesterday that U.S. economic growth will be below 3% "for a prolonged period."