Are Stocks Still Cheap?

Tyler Durden's picture

According to the media hype, stocks are never expensive; but if you care a little about the actual price you are paying for stocks, perhaps the following two charts will at least raise a doubt about chasing this fun-and-games. The prospective P/E on both US and non-US equities are now at the top of the post crash range. Multiple-expansion has driven the rally in large part on the basis that central banks have removed the downside tail to investing but at these valuations (and with the expectations that are still priced in for H2 2013 earnings - up 14% vs up 4% in H1) surely caution is warranted.


Here are EPS growth consensus expectations for the S&P 500 for the rest of the year...


and based on this hockey stick, here is the forward P/E for US (and non-US) equities...


Charts: Goldman Sachs and Morgan Stanley

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Lost Wages's picture

They make for a cheap laugh.

SafelyGraze's picture

you are able to still buy them with things-called-dollars


Lets Buy The Dip's picture

yes, I think stocks are not cheap, but they love to tell us they are. If you take a loook at the bull bear ratio chart, the bull market started in 2012, so are stocks cheap, i do not think so, but will they go higher, I think so. 

Have a look at the energy sector. WOW => There is money pouring in there, and that is likely to go higher. Crude is set to take off fast.  

razorthin's picture

Take off, right into the into the gas tank of the overwhelming under-employed at a premium price.  That's bullish.  Buy Buy Buy.  Fuck, charge it.  You never need to pay for it.  Just like you didn't in 2007.

samcontrol's picture

Depends what stocks really.

I find my stocks " cheap " . and will argue the case for most i own.
THEY HAVE ALL BEEN SMASHED while the markets are well ,here.
I was a bit early but mostly patient...

I have 20 what you guys call paper stock.....
Let's start..
Just bought USLV under 10. Don't plan on holding onto it for a life time . But a quick pop could give me an apartment. yea yea fed and central bank playbook is to trash paper and buy phys think we have several managed ups and downs...before the world ends (segun vds.)
CYTX . Bought at 2.70 (thrice :) ) . Regenerative medicine . Went to the bahamas , worked fine on my legs and even better on my girfriends boobs.
RNO .. Bought that at the open .. who the fuck wants coal and a big dividend right!? Q idiota ! Endouye!
TOT, EXK at five , PZG at 1.50...,, you guys go ahead and buy all that physicall siver that i can't and we compare notes in 24 month ok?
I could give you the rest but the red arrows and answers will be the same ..
I am all hears , unleash hell ???

samcontrol's picture

i got them all right. , for three years SVXY nice BIG and DEEP.

W T F II's picture

"We are very constructive on the market at this level and find a number of compelling values here"...

Fill in speaker, date, market level, network, time of day, host, etc....

slaughterer's picture

The helicopter does not acknowledge P/E as valid instrument for valuations.  (Look at AMZN)  :)

Everybodys All American's picture

AMZN doesn't even have a PE because they lose money. Look at LNKD.

Downtoolong's picture

We're all going to sell at the top and be rich. Every last one of us. Trust me.


akak's picture

Right after they ring the official bell.

sun tzu's picture

I remember working at Nortel in summer 2000 and everyone was saying they were going to retire in 5 years. Little did they know that a couple of months later they would be laid off and a year later their million$ in stock options would become worthless. 

Charles Nelson Reilly's picture

"These will be fabulous investments and will make millions of more people rich" - Fuckhead Cramer

bnbdnb's picture

What days does the fed buy MBS?

The Swedish Chef's picture

Sorry, got that all f´ing wrong...

Yen Cross's picture

     Stocks are cheap! lol     I'm long beef jerky...

McMolotov's picture

Long Beef Jerky: worst porn name ever.

Yen Cross's picture

 I thought I was out of laughs... Well done.

TheProphet's picture

"Nude Gingrich" is the worst porn name ever.

dsg2003gt's picture

Today was not a POMO day. Impressive.

bnbdnb's picture

Nope, but anyone know which bank got some MBS lovin?

FinalCollapse's picture

Which earnings are used: the forward (forecasted out of thin air) or the Shiller 10 year averaged? I think the Shiller measure is objective and unmanipulated. If I recall it correctly the P/E is much higher when using the objective Shiller EPS.

The corporations are borrowing at super low interest rates to buy back their shares. This artificially lowers the P/E ratio while it balloons the debt which will eventually come due. The P/E does not take into account the debt incurred.

This is all so manipulated and there are so few willing to take it apart and show what bs it really is.

Rainman's picture

Speaking of manipulation, Big 4 accounting firms are rubber stamping, head nodding whores

PontifexMaximus's picture

Wrong question asked: how much more and how long for sure free money available? thats the question to be answered.

q99x2's picture

Are stocks still cheap?

Rats in the alley and a roach on the street.

Is reality a two bit whore?

Doesn't matter as long as you get yours.

kito's picture

Are Stocks Still Cheap?...................

but dont you price figure that out???????

silly me.....................

jrpuffnstuff's picture

Stocks are still cheap, when you consider government is a long term issue.  Suck on that!

jrpuffnstuff's picture

jr you are the best.  Fuck all the other paranoid assholes and goldbugs

jrpuffnstuff's picture

and all you Zhers can suck on that!

Yen Cross's picture

  JR is a hoot, and you're a pole smoker!

samcontrol's picture

who is Jr , the guy from Dallas?

The Swedish Chef's picture

Cheap, expensive, valuations, P/E... What world are you living in? QE, baby, it´s all that matters. We´re gonna have a nice, record breaking run up to new highs. Until that untimely black swan that always tends to rear it´s ugly head when you least expect it. 


Lockin profits and ride the wave.

cnmcdee's picture

It's gonna fucking cr..assh.. The market always falls in May .. so will it this month!

semperfi's picture

I wouldn't 'bet' on it.  DOW 50k.

buzzsaw99's picture

P/E may have been a factor in determining equity values in the past but lately they seem to have no bearing whatsoever. There are so many four figure and negative infinity P/Es out there that we must consider the possibility that there is no market, there is only the bernank.

Kirk2NCC1701's picture

A: It depends on whose money (OPM!) you are using and whom you can sell it to (a Greater Fool!) at the right time (JIT!).

kito's picture

@jr------nothing like a little self deprecation.................

Yen Cross's picture

     Looks like the Huffington Post is trolling.

CDNX fan's picture

"Cheapness" only relates to the unit of currency that is purchasing those "stocks": The U.S. dollar, the Euro, the Pound, and the Yuan are all toilet paper and being debased not by governments but by the bankers led by the Squid. So the real question is this: "Is holding cash/currency "safe"? We have all seen the charts from the St.Louis Fed that shows a parabolic increase in both their balance sheet and the money supply while velocity heads south. The replacement value of common stocks can only be greater down the line if they are valued in a depreciating currency. And by artifically suppressing both rates and the p.m.'s, they have herded every investor on the planet into equities 'cuz they ain't nothin' else to own. 


Having said in my wind-baggiest verbage, I went 20% short today and will continue to short 20% per week until I either a) run out of money or b) watch the S&P crash and make a fortune. $200k per week for the next five weeks. $1,000,000 bet via S&P November puts.


I am targetting $50,000,000 by expiry.


May the wind be at me back and the squid up my ass.

semperfi's picture

You can't fight city hall.  

samcontrol's picture

you are mad.... but hey UVXY is the best play for your madness.

samcontrol's picture

and +1 for having a plan.

TooBearish's picture

Good luck with shorting ANYTHING but non arroved inflation hedges ...approved inflation hedges r US equities, not approved PMs, commodities, credit, shorting bonds and esp managed futures.

auric1234's picture

Just buy gold and popcorn.


semperfi's picture

You bet your ass they are!   Buy! Buy! Buy!  DOW 50,000 gauranteed!!!    Really.  

Clowns on Acid's picture

They will have to pass a Law...only can buy on a down tick....

moonstears's picture

Metals miners are cheap IMO.