Amazing That More People Aren't Freaking Out

Stocks Climb to Nosebleed Territory - Unless You Factor in the Tumbling Buck
In case you've missed it (unlikely, unless you just returned from another planet), the stock market is on a tear.
The Dow Jones Industrial Average poked its head above the 14,000 barrier yesterday, but settled in for the night just below the rarified mark. The Dow and its companion Transports have once again confirmed (a la Dow Theory), and suggested there is more to go on the upside, no matter the increasing frequency of nosebleed numbers.
Thinking about this, and thinking about the dollar as I always do (occupational hazard), I wondered what the Dow Jones Industrial Average would look like if we adjusted it for the fall in the dollar.
So, that's what I did. The chart below shows the Dow Jones Industrial Average (black line) compared to the Dow Jones Industrial Average Multiplied by the US$ Index (red line). Both are a monthly price series.
Apparently, despite the very nice surge in the unadjusted DJIA, when adjusted for the falling dollar it is still well off its old highs made back in May 2000...hmmm!
Factor in the Dollar and These Dow Numbers Are Less Than Exciting
Anyone care to offer some conjectures, implications, guesses, or logic for why this is happening? No takers? Ok, here are my thoughts:
Stocks represent ownership of real assets in the real world. And said assets (just like gold) should reflect "real purchasing power." Thus, a falling dollar means said assets should go higher, all things being equal (ceteris paribus for the economic literati among us).
International investors see the Dow as cheap thanks to the dollar demise. So investment capital is pouring into the already nosebleed worthy Dow.
The P in P/E (price earnings ratio) is bid higher precisely because the E in the equation is rising thanks to a falling dollar. The E generated from overseas sales, relative to domestic, tends to rise because of currency translation benefits back into dollars. When the collective P's for multinationals (which are a very big part of the Dow) are bid higher, the index follows in kind.