Even with stocks trading near record highs, equities remain the best bet for the ordinary investor. Stocks could easily jump another 25 percent before the bull market is done.

The average price earnings ratio for the S&P 500, which accounts for about 80 percent of publicly traded companies in the United States, is about 19.7.  That is a bit above the 18.90 average for the past 25 years but hardly overpriced if we consider how efficiently corporations use capital to create value these days.

Google was established with initial funding of only $25 million and in six short years became a global company worth $23 billion.

In the digital age, software can be used to create whole new industries—like e-commerce and social networks—or to improve existing products and services at much lower cost than by simply adding buildings and equipment as was required during the machine age.

That's why U.S. corporations are flush with billions in extra cash—they don't lack for new opportunities to earn profits but need less money to do so. Hence, they use that extra capital to buy back stock and along with individual investors, bid up prices for young companies like Uber that exploit new concepts.

The abundance of capital pushes up the value of stocks and pushes down interest rates on corporate and government debt, and these are structural changes, not something created by policymakers, that are not likely to abate.

In October, the Federal Reserve ended quantitative easing—its purchases of long term Treasury and mortgage backed securities—but instead of pushing up interest rates on Treasurys, as expected, those are down from a year ago.

With European and Asian economies weakening, the rush of foreign investors into dollar denominated investments further boosts U.S. stocks and pushes down bond yields. And that trend will likely moderate the downward pressure on equity prices when the Fed starts raising short term interest rates this summer.