Are Stocks Cheap?

Tyler Durden's picture


This is the only chart the retail investor needs to remember when bombarded day after day by the media with regard to how 'cheap' stocks are...



Source: UBS

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Tue, 12/04/2012 - 11:51 | 3032510 unwashedmass
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all except for gold and silver stocks which are now, t hanks to the cheap as dirt. 

Tue, 12/04/2012 - 11:57 | 3032531 redpill
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Stocks are at the same level they were 5 years ago before the shit really hit the fan, and we haven't really addressed any of the fundamental issues since.  Anyone who thinks that equates to being cheap is either on drugs or is a Keynesian.

Tue, 12/04/2012 - 12:09 | 3032571 eclectic syncretist
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And you can bet there has been a lot of poor accounting going on ever since "mark to fantasy" was approved as a valid accounting method and gave the green light to get uber creative.  The true P/E's are a lot higher, although that may not be revealed for some time yet.

Tue, 12/04/2012 - 14:10 | 3032971 Hugh_Jorgan
Hugh_Jorgan's picture

Yeah, they really had to keep banging on the smoke button once Enron imploded so that they could keep the lid on the fact that EVERYONE cooks the books like Enron including the US Treasury/Fed cartel.

We're sitting in a room full of professional card cheaters with a pot full of mostly counterfeit money. Ready to play?!!!!

Tue, 12/04/2012 - 12:24 | 3032622 El Oregonian
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It's their "Introductory Offer". The fine print will become apparent shortly...

Tue, 12/04/2012 - 12:53 | 3032661 smiler03
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Please excuse my ignorance. What is "NTM" ??


Tue, 12/04/2012 - 13:23 | 3032787 DavidC
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NTM P/E: Next 12-month price-to-earnings ratio.


Tue, 12/04/2012 - 12:39 | 3032658 Dollar Bill Hiccup
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What about a Keynsian ON drugs?

Paul K says it's only for medicinal purposes ... yeah right.

Tue, 12/04/2012 - 12:43 | 3032675 Hippocratic Oaf
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 Anyone who thinks that equates to being cheap is either on drugs or is a Keynesian.


Or a stock buy buy

Tue, 12/04/2012 - 11:57 | 3032533 Levadiakos
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Rationalizing a $50/oz silver purchase is always tedious

Tue, 12/04/2012 - 12:04 | 3032551 GetZeeGold
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He just woke up from a coma.....cut him some slack.

Tue, 12/04/2012 - 12:00 | 3032541 pemdas
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Using Graham and Dodds PE matrix, ,with current long T-bond rates of 2-3% and current zero growth for the economy, stocks are fairly valued. Change your bond rate or growth assumption and get a different answer.  Bottom line, currently fair value.

Tue, 12/04/2012 - 11:51 | 3032511 Super Broccoli
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thanks to the fed QEternal we'll ZIRP this up sky as a limit !!!!

Tue, 12/04/2012 - 11:51 | 3032512 buzzsaw99
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i expect an(sic) shrinking denominator. shrinkage bitchez!

Tue, 12/04/2012 - 11:52 | 3032514 govttrader
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If you look at the performance of stocks vs other "correlated" assets, stocks are close to all time EXPENSIVE levels.  If you think that stocks are cheap...than the better buy would be OIL.

Tue, 12/04/2012 - 12:20 | 3032546 Quinvarius
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like what asset? 

Tue, 12/04/2012 - 11:53 | 3032515 orangegeek
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It's all a matter of probability. 


SP500 Weekly does not look strong technically.


The global economy has been a mess for years now, but the markets climb higher.   Using technical and elliott wave analysis creates a different perspective.

Tue, 12/04/2012 - 11:56 | 3032522 JustObserving
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Stocks are not cheap but the confetti to buy them gets more abundant and cheaper everyday.

Tue, 12/04/2012 - 11:59 | 3032539 Caviar Emptor
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...and since you ultimately have to convert stocks back into confetti....

Tue, 12/04/2012 - 12:02 | 3032543 JustObserving
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You can convert to gold and silver - real money or tangible value.  Hence, the relentless attacks on gold and silver.

Our corruption grows much faster than our confetti.

Tue, 12/04/2012 - 12:18 | 3032608 Caviar Emptor
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Would you sign my copy of WHo Moved My Confetti?

Tue, 12/04/2012 - 11:57 | 3032530 Caviar Emptor
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Stocks are cheap. And like a cheap hooker, will leave you with something to remember by

Tue, 12/04/2012 - 11:57 | 3032535 Super Broccoli
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Imagine you're a stock broker and Uncle Benny gives you 40 billions a month forever ...


Hum yeah, stocks will rise till the end of times !

Tue, 12/04/2012 - 12:06 | 3032559 JustObserving
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It will be $85 billion a month from January.

Tue, 12/04/2012 - 11:59 | 3032540 muppet_master
muppet_master's picture

casino stocks = EXPENSIVE

the stupid mainstream media says AFTER A HUGE PUMP:  "stocks are cheap" = me SHORT !!! & RIDE and SHORT MORE !!!

shorted FB (flopbook) at $25.7, $26.2 and yesterday @ $28.1 (high = 28.4) = MY AVG SHORT PRICE = @26.8

was saving more ammo for $30, but i don't think it will reach it...YESTERDAY, ONE OF THE MANY SHOE SHINE BOYS/GIRLS from cheerleading bs-mw (cbs-mw) says:  BUY FB !!!!!!! = me short...and it went from $28.4 to $27 close




yes and short the spx too !!! avg short price = 1408....shorted in phases from black fri until a few days ago, now just riding baby = ride and enjoy life

Tue, 12/04/2012 - 12:05 | 3032554 LawsofPhysics
LawsofPhysics's picture

Are stocks cheap?

You only need to answer two questions;

1) Priced in what?

2) What is the counterparty risk of that paper?

I'd say that relative to real risk, they are still pretty expensive priced in dollars.

Tue, 12/04/2012 - 12:09 | 3032572 Everybodys All ...
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Tue, 12/04/2012 - 12:15 | 3032562 TruthInSunshine
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Other Famous Quotes


  • "There's never been a better time to buy a home."  NAR
  • "Just the tip. I promise...I'm in love with you, baby."  -  Name Unknown
Tue, 12/04/2012 - 12:20 | 3032614 WhyDoesItHurtWh...
WhyDoesItHurtWhen iPee's picture

"Just the tip. I promise...I'm in love with you, baby." - Name Unknown

There is a motel half an hour away named "The Halfway Inn".

Tue, 12/04/2012 - 12:14 | 3032566 Dr. Engali
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Stocks may not be massively over priced if we had earnings growth, but in a deleveraging(up for debate) economy we should see more multiple contraction.

Tue, 12/04/2012 - 12:09 | 3032567 reader2010
reader2010's picture

My account told me back when Dumbya was decided to be the next in the Office, "this is a decisive moment because we'll be able to make all of our money and KEEP it."  He continued on, "everything is cheap, and you need to buy all you can buy." 

Tue, 12/04/2012 - 12:30 | 3032588 muppet_master
muppet_master's picture

back in jan 2001

stocks WERE cheap:  aapl, ibm, hd

of course they got cheaper after 9-11 and MUCH CHEAPER spring 2002 = djia @ 7.2k

but NOW if you are a stupid LIE-BERAL. go ahead and buy casino stocks...well u know, u don't want odummer QEorganizer-RAPIST-of the 99% and enabler of the 1% to FAAAAAIL do you??

go ahead and buy aapl @ $590, goog @ $688, IBM @ $190, FB @ $27....its all a freaking casino !!!!

Tue, 12/04/2012 - 13:48 | 3032874 reader2010
reader2010's picture

No, he was talking about buying gold.

Tue, 12/04/2012 - 13:48 | 3032877 reader2010
reader2010's picture

No, he was talking about buying gold.

Tue, 12/04/2012 - 12:10 | 3032577 Satan
Satan's picture

They may go up in price...unfortunately however, not in value.

Tue, 12/04/2012 - 12:12 | 3032583 classy_hopper
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Does this include the upcoming downward revisions in earnings?

Tue, 12/04/2012 - 12:14 | 3032596 goldenbuddha454
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ZH, repost the new chart after the impending collapse.  Maybe then I'll jump in!  Thanks, Buddha

Tue, 12/04/2012 - 12:16 | 3032602 muppet_master
muppet_master's picture

-40% in spx

stocks will be cheaper...BUT NOT YET CHEAP...

rule #1 = casino stocks DON'T GO STRAIGHT after a -40% drop, yes take short covering profits and prepare for major dead cat bounce !! there were plenty of those from 4-2000 to 3-2002 and also from 10-2007 to 3-2009.....


Tue, 12/04/2012 - 12:25 | 3032623 Quinvarius
Quinvarius's picture

i must be the only one on the planet who is not short.  2009 lows all over again.  yes the economy sucks.  stocks are still going up.  it is about the money.

Tue, 12/04/2012 - 12:37 | 3032652 riphowardkatz
riphowardkatz's picture

to make money its not what you sell for its what you buy for. yes the economy sucks, yes stocks are still going up. First they will go down.

Tue, 12/04/2012 - 12:55 | 3032706 Quinvarius
Quinvarius's picture

this is like talking to a brick wall.  you guys are just going to have to get slaughtered and learn the hard way how the markets actually work.

Tue, 12/04/2012 - 13:04 | 3032669 tawse57
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This much talked about stock market crash is not happening is it?

This time last year most of the finacial articles were warning of markets being in a bubble, at heights and that a crash was only weeks away... and what happened - markets rose through 2012.

I am a uber bear but, after 2012, I am now beginning to feel that the bear's cause is lost. They can just keep printing and propping these markets up using the PPT.

Tue, 12/04/2012 - 14:24 | 3033027 Lewshine
Lewshine's picture

@ TAW,

The problem I think everyone is trying to illustrate is the "NEED" issue...Which is far more influencial than any fundamental factors.

If the Fed and their minions NEED an asset class to retract, it does. If they need it to ramp, it will. Regardless, of momentum, technicals - or any other thng under heaven. This is the problem with central planning. In their efforts to control the economy, slicing and carving out their interpretation of IDEAL, they steamroll the players who have committed to a fundamental approach.

The Fed's need is the ONLY thing that you can front run. The aboration is the contrairian play. IE; A pop in oil is a short. A run in metals should be averaged into short (as a hedge against physical), All equity dips beyond a .75% to 3% drop, should be bought...And most of all: Any potential implosion or doom, such as housing, jobs, Greece, Spain, the banks or fiscal cliff...Or whatever else might make a "Panic Headline", with a date attached to it, SHOULD BE BOUGHT LONG WITH BOTH HANDS WITH ALL THE FIAT PAPER YOU CAN GET YOUR HANDS ON!! The Fed's NEED will always be met...They have the AUTHORITY. Here's the principal, there is authority and then there is power. In a professioanl football game there is 12 muscled up guys with ALL the power needed to move the ball up and down the field (As there is investors in the market). Then, there is four fat little men running around with black and white shirts on. If they choose to exercise their "AUTHORITY", over the 12 very powerful - The game changes in that moment. Now, take away integrity, fairness and honesty...And you have our current situation. Nothing will stop the Fed and the banks from creating their ideal, this side of absolute destruction of the system.

Tue, 12/04/2012 - 16:48 | 3033473 NeedtoSecede
NeedtoSecede's picture

Lew, last time I watched a football game (American football or the game called football that the rest of the world plays) there were only 11 guys on the field from each team.  Irrelavant to your larger point, but we are detail freaks here at ZH...

Tue, 12/04/2012 - 13:09 | 3032745 caigege
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Tue, 12/04/2012 - 13:28 | 3032807 Samsonov
Samsonov's picture

I believe it's predicting that the market might go up or down.

Tue, 12/04/2012 - 13:10 | 3032748 Cortez
Cortez's picture

The longer they prop, the harder it'll drop.

Tue, 12/04/2012 - 13:21 | 3032774 Burticus
Burticus's picture

No, investors need to also check out a long-term chart of stocks measured by a stable yardstick, gold.  The obvious trend is DOWN.

You can cut a ruler in half and renumber it to 12, but don't believe that yer pecker actually doubled in size...

Worse yet, even though your buying power of your stock investments has been destroyed by central bank cyber-money creation, you still get taxed on your nominal "gains."

Tue, 12/04/2012 - 14:45 | 3033109 RichardENixon
RichardENixon's picture

So you're saying I ruined a perfectly good ruler?

Tue, 12/04/2012 - 13:27 | 3032799 NEOSERF
NEOSERF's picture

The only problem with the graph is that the dotted "average" likely includes the 2001 Tech bubble, the 2005 housing bubble PEs that never should have been and likely won't ever happen again...take those out and your PE avg is probably 9-10

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