Jeremy Grantham, chief investment strategist at GMO, says stocks are overpriced now.

"The market … is worth only 850 or so; thus, any advance from here will make it again seriously overpriced, although the high-quality component is still relatively cheap," Grantham wrote in his latest quarterly letter released this week.

Grantham is cautious indeed on the medium to long-term outlook; he thinks that after the initial kick of the stimulus package the U.S. would move into a multi-year headwind "as we sort out our extreme imbalances.”

"This is likely to give us below-average GDP growth over seven years and more than our share of below-average profit margins and price-earnings ratios, so that it would feel more like the bumpy - bumpy, but not so disastrous —1970s than the economically lucky 1990s and early 2000s," Grantham says.

Grantham says the U.S. consumer is about as badly leveraged as ever.

"Up until the last few months, I was counting on the Fed and the Administration to begin to get the point that low rates held too long promote asset bubbles, which are extremely dangerous to the economy and financial system,” he notes.

"Now, however, the penny is dropping, and I realize the Fed is unwittingly willing to risk a third speculative phase, which is supremely dangerous this time because its arsenal now is almost empty."

U.S. stocks climbed early on Monday, as rising oil prices and better-than-expected earnings from Exxon boosted energy companies and data showed a larger-than-anticipated rise in personal income, the Wall Street Journal reports.