I wrote often throughout 2014 about the danger signals flashing from an excessive run up in debt and derivatives. We have a repeat of the scenario we suffered in 2008, only much worse. The budget recently passed by Congress put taxpayers on the hook for a 2008-like derivatives failure. The potential losses could exceed the previous financial meltdown as other world market conditions exacerbate a bad situation.

Last week Bill Gross and the former co-CIO of PIMCO, Mohamed El-Erian, were advising clients to lighten up on stocks. You may agree that these are certainly two people with a passion for what they do. To that end, we all benefit.

Shortly after each month end (after the most recent reported earnings numbers are posted), I like to run through a few of my favorite valuation charts to gauge level, asses risk and to get a sense for what the probable forward return may be. Fortunately, there is a great deal of historical data that can help us.

I cringe when I hear someone on Wall Street say that the market is cheap based on forward P/E (price-earnings ratio). Unfortunately, profit margin cycles change (revert back to trend) and those lofty earnings estimates get revised lower, making forward P/E a poor valuation tool. I came across this chart this week. Note where forward P/E was in October 2007 (15.2) and where it is today (15.6).

Turning Japanese in todays macroeconomic environment means that your country is at risk of deflation which can turn into a 20 year battle, like in Japan.

As I wrote in my latest Forbes article and in my current weekly column On My Radar, most investors are unaware and ill-prepared for the impact that rising interest rates will have on their bond funds and ETF investments. There has been an unprecedented period of Fed participation (manipulation) with six years of near zero-percent interest rate policy and trillions of newly created currency.