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Stocks Are Not Cheap

Tyler Durden's picture


Presented with little comment aside to note the constant gibberish spewed forth from various media channels that stocks-are-cheap when in a ZIRP environment - that has never been experienced before (though low rates typically indicate lower multiples) -  more stocks than ever before are 'expensive' on a price to forward-earnings basis...



Source: Morgan Stanley


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Fri, 04/05/2013 - 17:39 | Link to Comment css1971
css1971's picture

Yeah, I see it, I see it, bu it still keeps going up, not down.

Fri, 04/05/2013 - 17:43 | Link to Comment Jack Napier
Jack Napier's picture

Buy signal!

Fri, 04/05/2013 - 17:44 | Link to Comment Martdin
Martdin's picture

Disregard reality, acquire stocks.

Fri, 04/05/2013 - 17:55 | Link to Comment HD
HD's picture

Just a reminder...

"it is unrealistic to expect the Fed to identify a bubble in stock or real estate prices as it is inflating, or to be able to pop it without hurting the economy. Instead, the Fed should stand ready to mop up the economic aftermath of a bubble."

"the economic effects of falling asset prices "depend less on the severity of the crash itself than on the response of economic policymakers, particularly central bankers."

Fri, 04/05/2013 - 17:46 | Link to Comment resurger
resurger's picture

If you are printing , keep printing ..

FB current PE 1,300 and LNKD 900 ... i think soon this will be the DIP

FUBAR, am out have a nice weekend bitchez

Fri, 04/05/2013 - 19:40 | Link to Comment Dealer
Dealer's picture

This will end badly.  You have a nice weekend as well sir.

Fri, 04/05/2013 - 19:55 | Link to Comment HardAssets
HardAssets's picture

Keeps going up . . . unless you price it in real terms versus nominal fiat terms. Then its absolutely horrendous.  But you do get to pay taxes on your 'gains'. 

Sat, 04/06/2013 - 03:22 | Link to Comment The Second Rule
The Second Rule's picture

I'm done talking to people about this. I have one friend who is "all in" the market. No matter how many charts I show him, no matter what arguments I make, he steadfastly clings to his prejudice that the market will keep rising forever. He's going to lose almost everything. I know it. But there's nothing I can do anymore so I've just thrown my hands up in the air and walked away to let him suffer his fate. There are some people in this world who simply cannot face reality.

Sat, 04/06/2013 - 11:16 | Link to Comment SamuelMaverick
SamuelMaverick's picture

Second Rule, as a rule the vast majority of the population of the world sheeple are impervious to reason and logic.  They have superman shields where reason bounces off their chest. Libs and progressives seem to have this quality in their mental makeup.  Dont bother throwing pearls to swine, it is a complete waste of time and breath, life is too short to waste trying to help those that cannot be helped or reasoned with.  They can ignore reality, but ( eventually) they can't escape the consequences of reality.   Let it go, and enjoy what you can in this rollercoaster ride of life.

Fri, 04/05/2013 - 17:42 | Link to Comment devo
devo's picture

SPY is the new safe haven, apparently.

Fri, 04/05/2013 - 17:44 | Link to Comment McMolotov
McMolotov's picture

There's never been a better time to buy.™

There's still time to get in.™

It's different this time.™





And at some point, we'll all laugh and say...

I told you so.™

Fri, 04/05/2013 - 17:46 | Link to Comment resurger
resurger's picture

What can possibly go wrong.

Fri, 04/05/2013 - 17:45 | Link to Comment herpderp
herpderp's picture

rofl, gold price is totally bonkers atm!

Fri, 04/05/2013 - 17:48 | Link to Comment random shots
random shots's picture

On one day Zero Hedge will lampoon sell side analyst research as a tool for gutting muppets and then the next day use sell side analyst research to make a point.  How do we know if this MS piece is to induce selling or to inform?

Fri, 04/05/2013 - 17:58 | Link to Comment Panafrican Funk...
Panafrican Funktron Robot's picture

Hey, if they want to publish their crime scene evidence, I see no harm in reposting.  It's not like anyone here with half a brain cell is actually going to short the market based on this information.  

Fri, 04/05/2013 - 18:00 | Link to Comment TumblingDice
TumblingDice's picture

WTF does it matter what the intention of this article is? I recommend staying on the sidelines if you need articles like this to make your mind up for you on your day to day trading decisions.

Fri, 04/05/2013 - 17:55 | Link to Comment buzzsaw99
buzzsaw99's picture

Stocks are a vehicle for corporate insiders and wall street to rape pension funds.

Fri, 04/05/2013 - 18:03 | Link to Comment Lady Heather...UNCLE
Lady Heather...UNCLE's picture

I may be going out on a limb here, but I do not think fundamentals of stock valuations are currently relevant. It is my belief (and I know I will be called a conspiracy theorist), that Bernanke is monetising the deficit and that money is going into stocks under instruction. Just my two bits worth. Now, what about that WTC7 building collapse?...I smell a rat

Fri, 04/05/2013 - 18:05 | Link to Comment WTF_247
WTF_247's picture

Where do you think the out of nowhere massive push at the close came from?

Bernanke never lets his minions down.  Buy it and you can't lose.

Fri, 04/05/2013 - 18:03 | Link to Comment Iam Yue2
Iam Yue2's picture

With no growth (the recovery that never comes), stocks are due to fall another 6/7% over the next four months.

Or to put it another way, this time it's different (not).

Fri, 04/05/2013 - 18:07 | Link to Comment ebworthen
ebworthen's picture

Gibbering Gibbons:

The big picture kinda' looks like Maria "G6" Bartiromo.

Fri, 04/05/2013 - 18:11 | Link to Comment kito
kito's picture

america---once where it was the land of the FREE

now its the land where everything is FREE.................................

Fri, 04/05/2013 - 18:38 | Link to Comment thismarketisrigged
thismarketisrigged's picture

boy, next week should be fun.


why dont they make it so when these companies report earnings, make it so the expectations are 1 cent for each company and revenue 1 million, so that when the horrible numbers come out, they will still beat the ''expectations'' and the market can celebrate it.


then again, if the market celebrates an 88,000 jobs added when expectations were 200,000, it does not even matter anymore.

Fri, 04/05/2013 - 18:40 | Link to Comment Yen Cross
Yen Cross's picture

     Actually Tyler, stocks are really cheap! That's the problem.  POMO/ZIRP

Fri, 04/05/2013 - 18:52 | Link to Comment ramacers
ramacers's picture

can't wait to hear what larry kudlow - the Supine Media propagandist - says tomorrow. wanna  bet cheap?

Fri, 04/05/2013 - 19:00 | Link to Comment max bucket
max bucket's picture

It's a fairly clear reminder that the market is where the Fed is currently hiding inflation


Fri, 04/05/2013 - 19:21 | Link to Comment Yen Cross
Yen Cross's picture

      Is silver carving a bottom out? This is the H-4 chart of my paper purchase late [Thursday Night] through the N.Y. cut. The trade is on auto roll/swaps. (open)


Sat, 04/06/2013 - 02:06 | Link to Comment jimmyjames
jimmyjames's picture

Is silver carving a bottom out?


maybe-but she could just be ready for an oversold bounce-

Gold is the workhorse....Silver will be late in the PM rush..imo..but..

When the final panic to safety happens..golds beautiful hidden sister will shed her veil and start to strutt her stuff across the world stage that will be breath taking in her quickness...she will be the leader in the panic to safety because of how cheap she always "looks" compared to gold..

Sat, 04/06/2013 - 02:48 | Link to Comment Just Ice
Just Ice's picture

strictly as an observation of the chart...the last leg down does not appear proportional to the period of wind up that preceded it;  news wise, Monday afternoon Casey Research is giving a presentation which I gather will be extremely bullish on precious metals and miners.

Fri, 04/05/2013 - 19:48 | Link to Comment razorthin
razorthin's picture

Not-so-stealth inflation, bichez.

Sat, 04/06/2013 - 09:17 | Link to Comment StarTedStackin'
StarTedStackin''s picture

I bought a 20 lb bag of rice 7 months ago for $10, and now you can get the exact same rice for ONLY $15.99.......



There is no real inflation though since the price of big screen TVs has dropped so dramatically.....

Sat, 04/06/2013 - 03:37 | Link to Comment Satan
Satan's picture

If you are implicitly backed by the FED and have access to free money then stocks have never been cheaper...

Sat, 04/06/2013 - 08:43 | Link to Comment Doctor Detroit
Doctor Detroit's picture

I thought it was the other way around, that low rates typically means higher multiples...? Higher rates means that your rate of return in alternatives to equities are higher, thus per will decrease to justify an equity investment - and the opposite is true for low rates. Am I missing something?

Sat, 04/06/2013 - 09:09 | Link to Comment StarTedStackin'
StarTedStackin''s picture

Will middle America ever wake up to the fact that QE = The Obowel Movement's war on the middle class?

Sat, 04/06/2013 - 09:44 | Link to Comment honestann
honestann's picture

Correct.  Stocks are not cheap.  I agree.  But (in my opinion), stocks are always grossly overpriced.

Nonetheless, who here in ZH realizes that real stock prices today (and ever since the low of the 2008 crash) have not changed.  The real price of stocks today is the same as the bottom of the 2008 crash.

Hows that?  I must be nuts, right?

In late 2008 the DJIA was about 7,500.  Now the DJIA is about 15,000.

In late 2008 gold was about $750.  Today gold is about $1500.

Which means, the dollar is worth half as much now versus 2008, so DJIA 15,000 now is equivalent to DJIA 7,500 in 2008.

That's just a fact.  Of course, when you sell the stocks you bought in 2008, the price you receive in dollars is double.  But you haven't made any real profit at all.  Nonetheless, the freaking predator tax-man taxes you on a 100% gain, when in fact you've earned NOTHING.  So now you've lost 20% (or whatever is your tax rate), thanks to fiat, fake, fraud, fiction, fantasy, fractional-reserve debt-note toilet-paper illusions.

Sat, 04/06/2013 - 11:22 | Link to Comment SamuelMaverick
SamuelMaverick's picture

Try telling this to friends and family, their eyes will glaze over and they will have the deer in the headlights look.

Sat, 04/06/2013 - 12:14 | Link to Comment The Invisible Foot
The Invisible Foot's picture

Any day now.

Sat, 04/06/2013 - 13:52 | Link to Comment AynRandFan
AynRandFan's picture

Chart of S&P500 trailing PE ratio from 1800's to present:

Chart of S&P500 Shiller PE ratio over same interval:

I just don't see a clear indication of over-valuation based on trailing PE.  In fact, I think it is self-evident at this point that there are no market timing indicators worth betting on under the current circumstances.

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