Sure, we all feel like geniuses now, right? We stuck it out -- "it" being the worst economic crisis since the Great Depression -- and have now enjoyed fat and happy double-digit gains over the past three months.

There's surely more to come, right? Right?!

Survey says!
Who knows? We Fools pride ourselves not on making market calls, which is a great way to get slapped silly by the market's invisible hand, but rather on our fundamental focus. Is a company's market share likely to shrink or grow? Has its management team delivered the goods over the long haul while deftly navigating up markets and down? And in terms of valuation, does the firm's stock look like a blue-light special or a high-end luxury item?

In my experience, it's that last element -- valuation -- that's often the toughest taco to crack. Some companies never look cheap, after all, while others that appear to be bargains may turn out to be value traps instead. Still, in general terms, one thing remains true: When a company sports moon-shot multiples, there's little opportunity to cushion the blow when the overall market hits the skids or when the company itself blows up.

The higher they fly, the harder they fall
Take, for example, Research In Motion and Google . The former has gained more than 70% year to date, while the latter has increased by roughly 30% over the period. Yet sneaking a peek at this illustration of recent history should be instructive for folks who may currently own either company's shares, as well as Fools who may be considering a purchase.

Yikes, that's a long way down. But, to be fair, that kind of rearview analysis always begs the question of whether investors could have -- or should have -- seen writing on the wall. My take: Perhaps not, but if they'd tuned into each firm's valuation, savvy investors might have gotten an early warning.

Shortly before its slide began, after all, Research In Motion traded at a level that priced in more than 60 times the previous year's earnings. Google, meanwhile, sported a P/E in the 50s back when we were celebrating New Year's 2008.

Bottom line: Be afraid of these kinds of stocks, be very afraid. When an all-but-inevitable market pullback arrives, they are sitting -- or in this case flying -- ducks.

Good company, lousy investment
JPMorgan Chase (NYSE: JPM) and Qualcomm (Nasdaq: QCOM) look priced to fall just now, too. And that goes double for the likes of Visa (NYSE: V) and Amazon.com (Nasdaq: AMZN), which sport P/Es north of 40. That's right. Current purchasers are apparently willing to pay more than 40 times earnings for the privilege of owning their shares.

Make no mistake. Like Google and RIMM, these are fine businesses; their stocks are just not finely priced. Indeed, with their swollen multiples, the downside risk of dreaded "multiple compression" is just too great, particularly when long-haul overachievers like Microsoft (Nasdaq: MSFT) and Wal-Mart (NYSE: WMT) are trading for a proverbial song. Continued...