• Monetary Metals
    05/02/2016 - 01:28
    The price of gold shot up this week, and silver moved proportionally. Headlines are screaming for gold to hit $10,000 or $50,000. Does this alleged new bull market have legs?

Guest Post: Chart Of The Week - Stocks Are Overvalued

Tyler Durden's picture




 
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Sun, 04/03/2011 - 11:04 | 1129673 digalert
digalert's picture

Double top?

Sun, 04/03/2011 - 16:00 | 1130239 French Frog
French Frog's picture

we have just pierced previous resistance at 1.06 and 1.08 and we have good support at 0.30/33 which gives us a tradable channel size of 0.73/0.78; being now above the 0.30/33 - 1.06/08 channel, the measured move would take us to 1.79/86; a possible double top indeed but not for a while;

an extremely bullish picture is developing using that Q Ratio: stock might look overvalued now but using the ratio the technical picture says that longer term there is plenty of upside left for stocks to be even more overvalued; this is not something that i think should happen but with qe3+ possibly around the corner, one can't discount that possibility, no matter how repugnant it appears to the rational mind;

and as we know, stocks can remain overvalued for a lot longer than people (bears/shorters) can remain solvent

Sun, 04/03/2011 - 16:29 | 1130308 Highrev
Highrev's picture

Dot-com snapback bitchez!

 

That was fun. :-)))

Sun, 04/03/2011 - 21:48 | 1130996 Ted K
Ted K's picture

Interesting, when it coincides with CNBC pimp daddies and sell-side whores dumping their crap on retail investors, all of the sudden Keynes instantaneously becomes a genius worth quoting.  The magic of lying with no conscience.

Sun, 04/03/2011 - 11:08 | 1129677 vote_libertaria...
vote_libertarian_party's picture

So what does a .30 mean in S+P price?  350?

 

And what does it mean if there is rising input costs, inability to raise prices and rising interest rates?

 

I'm just saying...

Sun, 04/03/2011 - 12:36 | 1129818 stickyfingers
stickyfingers's picture

If regression to the mean really works, .30 will be on the way to a lower low since the high, according to the chart, was 1.82.

Sun, 04/03/2011 - 11:14 | 1129684 Korrath
Korrath's picture

I have no doubts at all that this market is highly over-valued.  I also have no doubt that when the correction comes it will be a massive run for the exists that will resemble a panicked stampede...the major problem I have is WHEN does this happen?  

I'd loved to start pilling on my position in SPXU, but each time I think a new black swan/cluster-fuck event will finally give us the correction, the market takes one glace at the event, yawns, then closes 15 points higher.

Sun, 04/03/2011 - 11:48 | 1129742 watmann
watmann's picture

dont try to predict when it will happen. Dont look for an event to make it happen, That wont happen. Dont read zero hedge articles and think they have any immediate bearing, they dont. we are in a fiction vs. fact mode. it will happen. it has to.

 

just a question of when.

Sun, 04/03/2011 - 12:21 | 1129796 YesitStrue
YesitStrue's picture

It seems that since the mid eighties, the Fed has controlled the markets. Sure there have been corrections, but as this chart illustrates, they can be ended with massive infusions of cash. I have expected a much deeper correction since 2003, but so far it has been denied. The only condition I can see that might inhibit the Fed is if we can no longer sell bonds and our debt interest goes out of control. However, I am beginning to believe they have a plan for that too. 

Sun, 04/03/2011 - 13:18 | 1129892 Squid Pro Row
Squid Pro Row's picture

The only condition I can see that might inhibit the Fed is if we can no longer sell bonds and our debt interest goes out of control. However, I am beginning to believe they have a plan for that too.

I think you are correct.  Until the world devises an alternative to the dollar, the US is nearly free from market discipline.  Interest, debt repayments, budgets, etc. mean almost nothing when you can freely print money and exchange it for real goods (this dynamic exports the inherent inflation problem).

The US prints about $4B/day and exports about $1.5B/day of those dollars for imported goods.  Those are the numbers regarding the efficacy of the inflation export mechanism.

Other nations surely know this and so far have accepted it gleefully.  How, why, and how much longer are the questions.  My guess is that they enjoy the stability garnered from the arrangement and that a change will not come any time soon.

 

Sun, 04/03/2011 - 13:59 | 1129968 Snidley Whipsnae
Snidley Whipsnae's picture

"Other nations surely know this and so far have accepted it gleefully.  How, why, and how much longer are the questions.  My guess is that they enjoy the stability garnered from the arrangement and that a change will not come any time soon."

Some other nations are hedging their dollars with PMs, as are most central banks that used to sell gold into the market. That is one change that I have seen the past few years.

 

Sun, 04/03/2011 - 13:54 | 1129955 Kimo
Kimo's picture

"However, I am beginning to believe they have a plan for that too. "

 

Yes.  And its the consequences that keep me awake at night.

Sun, 04/03/2011 - 16:34 | 1130322 Reese Bobby
Reese Bobby's picture

Try thinking about puppies...

Mon, 04/04/2011 - 01:33 | 1131470 chocolate starfish
chocolate starfish's picture

Korrath, there is so much residual momentum that the market is sure to take a good long time rolling over. It could easily be another year before things start getting really scary.  Meanwhile there's a perilous temptation to look like a genius and pick the top.  Utterly pointless.  Don't sell on news or fundamentals.  Don't try to second guess what Bernanke is going to do.  Just follow the price action.  

Look, all we know is that when this mother rolls over, it will stay rolled.  So set up a childishly simple chart with a very long term momentum indicator and wait for it to fire off short.  When it finally does, sell everything.  Until then, stay long.  Why make it any more complicated than that?

Sun, 04/03/2011 - 11:13 | 1129685 Hedgetard55
Hedgetard55's picture

There is no such thing as "Overvalued" or "Undervalued" when the buyer of size can print as much money as he wants.

Sun, 04/03/2011 - 11:53 | 1129752 bankrupt JPM bu...
bankrupt JPM buy silver's picture

agreed.

Sun, 04/03/2011 - 14:21 | 1129969 akak
akak's picture

There is no such thing as "Overvalued" or "Undervalued" when the buyer of size can print as much money as he wants.

Utterly incorrect.

Like so many others who focus on the nominal and not the real, you confuse price with value.

Sun, 04/03/2011 - 14:29 | 1130051 Hedgetard55
Hedgetard55's picture

I understand the difference quite well, thank you.

 

I understand the nominal prices will increase as the currency gets debased, thank you. Which was my point.

 

So go fuck yourself.

Sun, 04/03/2011 - 14:48 | 1130087 akak
akak's picture

If you do in fact understand the real difference between price and value, then your first post is nonsensical --- so which is it? 

PS: Prices in nominal, and arbitrarily printed, fiat units do not necessarily convey value.

PPS: Your hyperdefensive resort to profanity implies, at least to me, a failure to fully grasp the concepts which you claim to comprehend.

Sun, 04/03/2011 - 17:09 | 1130394 Hedgetard55
Hedgetard55's picture

Value is a function of what price someone will pay you - nothing else, fucktard. So fuck off.

Sun, 04/03/2011 - 17:18 | 1130404 akak
akak's picture

Thank you for finally demonstrating that your lack of financial intelligence is on par with your lack of civility.

But I will throw you an undeserved bone:  Value and price are two completely separate concepts.  Is a pound of tin priced at $1.50 in 1973 dollars more or less valuable than the same amount priced at $7.00 today?  You say you grasp the concept of nominal vs. real prices, but your "definition" above utterly refutes that claim.

Sun, 04/03/2011 - 17:31 | 1130460 Hedgetard55
Hedgetard55's picture

Fuck you prick.

Sun, 04/03/2011 - 17:36 | 1130473 akak
akak's picture

Cheers!  It's been delightful chatting with you too.

Sun, 04/03/2011 - 17:54 | 1130503 Hedgetard55
Hedgetard55's picture

Akak,

     Who the fuck are you to tell me I don't know the difference between real and nominal? You don't know shit from shinola about me.

 

     The "value" of something is whatever the price of the last marginal buyer willing to buy it from you is. If you can't understand that then you are fucking hopeless.

 

     Saying the market is "overvalued" is meaningless if the marginal buyer is the Fed through it's proxies the PDs, and Ben does not give a fuck what the price is, only that he will pay a higher one than is currently being offered.

 

     And if you can't understand that, then I suggest it is you that is the fucking moron here, not me.

Sun, 04/03/2011 - 18:10 | 1130523 akak
akak's picture

Who the fuck are you to tell me I don't know the difference between real and nominal? You don't know shit from shinola about me.

I am merely somebody who has seen you repeatedly demonstrate the inability to distinguish the real from the nominal.

   The "value" of something is whatever the price of the last marginal buyer willing to buy it from you is.

No, you just defined "price".  Well, in a circular kind of way, which is not even helpful.  And I will repeat it again, because you simply do not seem willing to grasp or even acknowledge the salient fact here:  Price does NOT necessarily equate to value!  They are two fundamentally different concepts.

   Saying the market is "overvalued" is meaningless if the marginal buyer is the Fed through it's proxies the PDs, and Ben does not give a fuck what the price is, only that he will pay a higher one than is currently being offered.

I never said nor implied that the market is "overpriced" --- that is a nonsensical statement.  What I DID imply is that it is overvalued, and increasingly so as the Fed steps in and distorts the market to its advantage.

If these are such elementary facts to you, then why are you so incapable of logically discussing them?

Sun, 04/03/2011 - 18:17 | 1130542 Hedgetard55
Hedgetard55's picture

" Price does NOT necessarily equate to value!  They are two fundamentally different concepts."

 

     Bullshit! Price IS the value - the value of the last marginal buyer, what he is willing to pay based on his belief of what the value is. And you can't see that???

 

     Now, if you have a different definition of value, good for you, but don't dog me because I use the common sense definition. You can call a dog a cat all day long, it does not make it true.

    

Sun, 04/03/2011 - 18:29 | 1130556 akak
akak's picture

In your initial post here, you claimed that "There is no such thing as "Overvalued" or "Undervalued" when the buyer of size {i.e., the Fed} can print as much money as he wants".  But that is so illogical, indeed absurd, that I am shocked that any reader of ZeroHedge (aside from Leo or RobotTrader) would make such a claim.

What you are explicitly stating is that the creation of arbitrarily large amounts of fiat currency out of thin air can impute value to the market, but that is nonsense --- all it can do is add to prices.  You are implicitly claiming what so many Keynesians like to do, that money = wealth, when of course nothing could be further from the truth.

Why is this not obvious to you?

Sun, 04/03/2011 - 18:44 | 1130583 Hedgetard55
Hedgetard55's picture

I implied no such thing you fucking liar.

Sun, 04/03/2011 - 18:47 | 1130589 akak
akak's picture

"There is no such thing as "Overvalued" or "Undervalued" when the buyer of size  can print as much money as he wants".

Your own words are there in black and white claiming otherwise.

Sun, 04/03/2011 - 18:46 | 1130586 Hedgetard55
Hedgetard55's picture

Akak,

 

     Go fuck yourself and your fucking lies, you arrogant fucking turd.

 

    

Sun, 04/03/2011 - 18:51 | 1130599 akak
akak's picture

Hedgetard, I like you too.

But you're still utterly confused on the concepts of price vs. value.

Sun, 04/03/2011 - 19:21 | 1130670 Raymond K Hessel
Raymond K Hessel's picture

OMG, I just finished this thread.

Please stop it.  You're both making me laugh so hard, I can't breathe.  I can't breathe.

Sun, 04/03/2011 - 23:49 | 1131318 nwvandelay
nwvandelay's picture

+222

Bravo to both hodgefucker and alex! - this little sequence has improved the drudgery of my monday considerably :)  keep up the good work lads

Sun, 04/03/2011 - 18:19 | 1130537 Hook Line and S...
Hook Line and Sphincter's picture

Hedgetard,

You are not wrong, yet you could be righter. Listen, and I think you will get it...

You may not like the nuances around how Akak corrected you, however, it's never too late to go a step deeper from your traditional well stewed concept that has become a part of your perspective. Nobody really knows you here, so swallow your embarrassment (if you feel none, then maybe it'll be clear after the short comparison below), but you do need to reconsider your definition of value. Extricate yourself from the semantic word prison of pre-ordained concepts.

A relative "value" can be in the tentative sense what the last marginal buyer is willing to buy it from you for.

An absolute "value" is the consideration of above, but framed appropriately by subordinating the above relative definition to the underlying knowledge that its tentative fiat based unit of account is distinct and separate from its essential value.

 

Sun, 04/03/2011 - 18:35 | 1130573 Hedgetard55
Hedgetard55's picture

Again, bullshit. How can you separate the "tentative fiat based unit of account" from the price, since the price is in that unit of account? How can you say it is "distinct and separate from it's essential value" when the price paid is in that fiat based unit of account???? You make no sense, anymore than akak does.

Sun, 04/03/2011 - 18:50 | 1130584 akak
akak's picture

You are so hung up on the fiat currency paradigm that you clearly cannot conceive of measuring value in any other terms --- and true value can NOT be measured in nominal dollar prices.  When one is using a constantly shrinking yardstick, one cannot be expected to make meaningful measurements much less comparisons, both of which are fundamentally essential to any financial and economic thinking or discussion.

Just as an example, let's say we forget about dollars altogether, and use ounces of silver, or bushels of wheat, or average labor hours, as our economic measure to assess the value (again, NOT the price) of a given stock, commodity or market.  Can you not grasp how this would lead to a radically different perspective on just how fairly (or unfairly) valued those stocks, commodities or markets might be?

Despite your assertions to the contrary, you are hopelessly focused on nominal prices, and cannot seem to see beyond those nominal prices to the underlying values.

Sun, 04/03/2011 - 18:55 | 1130602 Hedgetard55
Hedgetard55's picture

Fuck you akak. I understand that measuring prices in silver or gold will yield different results from fiat currency. What fucking hedgetard here does not understand that?

My SLV went up 90% in 2010. The market went up whatever, but priced in silver it "dropped". You think I dont understand that, asshole? Fuck you.

So now you are determining "underlying values" better than the market? "Underlying values" is merely a bullshit term for what YOU THINK those assets are "really worth". Well, guess what? Ben does not agree with you. And he has a lot more money than you, prick.

 

Sun, 04/03/2011 - 19:01 | 1130623 akak
akak's picture

You claim you understand the difference, but then you turn around and make statements directly contradicting that difference, so how am I supposed to interpret such jibberish?

Your initial comment here ---- ""There is no such thing as "Overvalued" or "Undervalued" when the buyer of size can print as much money as he wants" --- directly states that the Fed can add VALUE to the market via running the fiat currency presses.  I say that arbitrarily ramping prices only adds to prices, but does nothing to add value to anything at all --- but you claim the opposite.

You're clueless.

Sun, 04/03/2011 - 19:11 | 1130648 Hedgetard55
Hedgetard55's picture

Fuck off, asshole. Your definition of value is different from everyone else's. I poijted out that running the presses devalues the d=currency and that in real terms the prices are not as good as they appear, but you conveniently ignored that, because you are a worthless fucking turd and liar so go fuck yourself and the whore you call your wife - unless of course your buddy here is your "wife".

Sun, 04/03/2011 - 19:50 | 1130660 akak
akak's picture

Yet you still believe that the Fed, via running the printing presses, can add VALUE to the market, so explain that please.

Are you Ben Bernanke?  Or are you coming on to me?  Or both?

I bet you're a total top --- ooh Daddy!

;-)

Sun, 04/03/2011 - 19:04 | 1130629 Hook Line and S...
Hook Line and Sphincter's picture

Hedgetard deals in fantasy, fiat, and contrived wealth, where there is no such thing as absolute value at a deeper level than he is psychologically willing to accept right now. I repeat...Hedgetard is not a retard, just challenged by his belief system. As long as he chooses to dream the elites demand of him, he can perpetuate his delusion through endless hours. The only disturbance to his lack of readiness will be the very real consequence of what his finances will look like after the devaluation.

Sun, 04/03/2011 - 19:08 | 1130639 Hedgetard55
Hedgetard55's picture

Fuck you, you lying motherfucker, and take akak's dick out of your mouth for a second.

Sun, 04/03/2011 - 19:18 | 1130662 Hook Line and S...
Hook Line and Sphincter's picture

Sweetheart, no need to get so mean! Now, about that SLV you own...I sure hope you sell at least some of it and put it into PHYSICAL. SLV has had no outflows for a week or two, which means it likely has no metal left and is thus no good for putting out fires where the sovereigns sucking up the real thing. Your SLV could quite possibly be in the outhouse real soon. Trade in for some PSLV would you? Hook Line and Sphincter cares for you, and wants the best for your delusional self because you likely have a family.

In case you didn't know, and I know that this will be difficult for you to understand as well, but since you own SLV, and have a fiat bias, please my dearest try to comprehend that the anus revolves around the TP, and PM wealth is the reality that Charmin revolves around the bung.  

Sun, 04/03/2011 - 19:23 | 1130677 Hedgetard55
Hedgetard55's picture

I have a "fiat bias".

Like your bias for dick? Fuck you and your butt pirate buddies.

 

Sun, 04/03/2011 - 19:37 | 1130713 akak
akak's picture

I have a "fiat bias"

Admitting that you have a problem is the first necessary step towards resolving it.

Congratulations!

Sun, 04/03/2011 - 19:40 | 1130717 Hook Line and S...
Hook Line and Sphincter's picture

Again, my darling Hedgetard...

  • The sun is AU, and that's the yardstick you are looking for. Quit crying because you've lost your reference point. Fiat is the planet that circles around it.
  • Your dark stinky finger of ignore-ance is the digit that itches your anus while you sleep at night, NOT the other way around!

Oh yeah, and quit dreaming of surrogating for me with Akak! That, my delectable servant, no manner of groveling will allow.

 

 

Sun, 04/03/2011 - 19:17 | 1130663 Raymond K Hessel
Raymond K Hessel's picture

That last line made me laugh out loud.

Sun, 04/03/2011 - 20:57 | 1130892 Nnthnt1
Nnthnt1's picture

whatever your notion of value is, its almost as abstract as 'beauty' or 'god'. I want you to explain, how are you going to use your concept of value in real life?

Are you going to refer to the ''real' value in 10 years of a company as the value the company wuold have had today?

yes price is not value. BUT tard has a point and it's this: even 'value' has to be evaluated with contemporary prices (scarcities). If your value here (book value=assets) is inflated then the real value stays the same OK (whatever that is) but what about the nominal value?

considering that

 - the 2000 stock bubble had by far the highest peak and

 - Q ratio is the multiple of PRICE to BOOK value

I wanna say: Maybe this time it's truly different?!

Maybe corporations, because of the computer age, have found a way to utilise their ASSETS (read book) better to generate profit. In other words, PRICE should be FUTURE EARNINGS.

I'm not a growth guy, completely the opposite. But maybe a cross industry comparison or cross time-snapshot comparison just makes more sense to call companies 'over' or 'undervalued' than a historical comparison of MKTCAP/BOOK??

Sun, 04/03/2011 - 11:15 | 1129688 Gloomy
Gloomy's picture

Stuff like this is just so clueless. Do you really think there is any chance of the market falling significantly with the Fed involved so deeply? Yes, there will be a crash, but only after hyperinflation makes further Fed intervention ineffective.

Sun, 04/03/2011 - 11:18 | 1129689 Hedgetard55
Hedgetard55's picture

It's astonishing that we have given a private corporation, run by an unelected and unaccountable Chairman, the ability to debase the currency to whatever level he desires. It is not just a stealth tax, or taxation without representation, it is downright theft for everyone who holds dollars or cash equivalents.

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