JPMorgan Reveals That Stocks Are More Expensive Now Than At Their 2007 Peak

Tyler Durden's picture

As we warned was likely to happen back in February of 2013 (given the typical trajectory of earnings expectations through a year), JP Morgan has confirmed that the S&P 500 is now more expensive on a forward P/E basis than it was at its peak in October 2007. So, despite the self-referential bias of each and every talking head asset-gatherer on mainstream media's denial, stocks do not offer value here... no matter how many TINAs or BTFATHs you hear...


At 15.4x NTM earnings, the S&P 500 is now 0.2x turns more expensive than at its peak in October 2007


Furthermore, on a Price-to-Book, Price-to-Cash-Flow, and Price-to-Sales basis, the S&P 500 is also well above its average valuation levels...


Still think we can grow into more multiple expansion... then you better hope for an unprecedented rise in confidence...


So, are stocks cheap?

Source: JPMorgan

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Hedgetard55's picture

"Expensive" is a relative term. If your REAL cost basis is ZERO as it is for Ben and Janet, they are no more expensive now than at any other time. A point not well understood.

GetZeeGold's picture



Millions of Americans have lost their unemployment would assume that will free up more time for them to buy equities.

Popo's picture

... or shop for healthcare.

slightlyskeptical's picture

Or take out loans they will never be able to pay back.

fonestar's picture

Everything is cheap when you are using fake money.

Dr. Engali's picture

+1 Lol... Fonestar is to bitcoin what DcFusor is to the Chevy Dolt.

fonestar's picture

Are you speaking of Bitcoin?  I would say Bitcoin is some of the most honest and most real money available.  It's limited in supply, requires energy to produce and is not controlled by any single entity.

Jack Napier's picture

If BitCoin is so limited in supply how exactly did it come to exist out of nothing? What's to stop a million BTC clones from coming and saturating the digital currency markets? I like BitCoin fine, but for what it is, not for what it isn't, and it isn't gold.

The fact that JPM is now calling out the market as the farce that it is means they are posturing. The inevitable crash is coming, and they will be able to say that they tried to warn us, they have our best interests at heart, and we should give them more money because they are so benevolent.

whatsinaname's picture

It took them this long to come to this realization about valuations ? Then Gold must be really really expensive based on their "fundamentals" ??

Handful of Dust's picture

Chinese slowly discover there's something out there better then buying all the overpriced Kalifornia houses:


China embraces 'Breaking Bad'? Three tons of crystal meth seized in village

BurningFuld's picture

OK boys do we have all our shorts locked in? Release the Kraken!

1stepcloser's picture

Is silver cheaper JPM???? Tell me u Fuckers...

Dr. Engali's picture

Valuations....LOl....that's almost as funny as technicals.

Schlomo Bergstein's picture

Indeed, an asset's only valuation is what someone is willing to pay for it and the Fed's proxies will buy equities at any price.

Cognitive Dissonance's picture

It is different this time. Seriously, with the Fed in hook, line and soon enough sinker it actually is different.

Not saying they can prevent another panic, but they can start buying equities, REIT's, corporate debt etc. right out in the open. The true buyer of last resort. While doing so assures the mother of all crashes, it also assures that the 'market' can, and probably will, go higher.....if not from here, then from a lower point after a correction.

Dr. Engali's picture

I agree 100%. It's been my contention that we will eventually get to the point where the fed is buying anything it can get it's grubby mits on, just like Japan. That's is why when people say there is collateral left for the fed to buy, I have to challenge that statement. There is plenty of crappy collateral for the fed to purchase. After all their cost basis for printing money is zero.

Pareto's picture

And therein lies the permanent damage right Doc?  The more the FED buys, the higher prices go, the more diluted real collaterall becomes.  I posted a few days ago that Keynesians don't believe that the Cantillon effect (He who spends it first spends it best) is relevant in Fisher's languishing "v" environment.  But it is totally relevant in the context of available collateral.  For if money printed out of thin air isn't worth anything, given ZIRP, then neither is the price effect on available collateral.  The exchange value of available collateral hasn't changed, only its nominal price!


The fact that Fisher's "v" is dormant does not make the Cantillon effect any less significant, rather it just speaks to the level of poverty (debt) the majority of people and government find themselves.  The longer this dislocation of capital continues to be used for primarily unproductive (speculative) purposes, the greater the deleterious effects that will be realized when there is no productive capital left to be found.  The illusion of free money demarcated by 0% interest rates manifests itself in the greater permanent and very real damage of universal unaffordability for anything (collateral) of real value.  I reiterate what James Grant said earlier in December -"The FED can change what things look like, but the FED can never change what things are."

Temporalist's picture

Let me condense this for you.


Central Banks destroy the VALUE of currency.  People no longer know what a dollar's "worth" is nor a Yen nor a Euro (or Turkish Lira, Venezuelan Bolivar...)  As a side benefit to the banksters they also try to destroy the value of asset classes like precious metals.  Unfortunately for the CBers 2 billion people in Asia have learned about how this game is played over the centuries and are dropping paper money for gold and silver.

Hedgetard55's picture

Exactly. But... since there is no free lunch, where does the purchasing power of the newly printed money come from? From you and me and anyone who holds cash or cash equivalents, through currency debasement.

RaceToTheBottom's picture

Your future kids are happily chipping in too.

Hugh_Jorgan's picture

I would add your grandkids, and several more generations down the line.

bobert's picture

Sorry to be a pain gentlemen but do you mean that the primary dealers will be buying?

As differentiated from the federal reserve banks buying equities directly?

Just wondering.

Dr. Engali's picture

The primary dealers are buying now, the fed will be in the future. It's inevitable. Technically the fed can't right now, but that doesn't mean anything in an environment where corruption rules.

Its_the_economy_stupid's picture

technically the FED can't bai out foreign owned banks nor support the Euro but then, what's a currency swap for anyway?

Musashi Miyamoto's picture

Chigorin vs Steinitz, 1892

32. Bd6-b4??

They are fucking themselves. No way this ends good.

JP McManus's picture

Ben inflates the P, not the E


edit: All they have to do is increase their expectations of Forward Earnings...

Rainman's picture

exactly, legalized accounting fraud takes care of the E

tarsubil's picture

The plan from the central bankers going forward is to stay high all the time to keep reality off their mind. The tops have no end. Starfleet Captain Alexander is lonely.

firstdivision's picture

With Prop Trading getting neutered, these kind of reports no confuse me as to the accuracy

JustObserving's picture

Not to worry, TWTR is still cheap.

Bosch's picture

Both numbers in the P/E calculation are currently bullshit so the only thing to do is sit on the sidelines with your popcorn. 

tarsubil's picture

That is one big KA- that we are seeing right now. Can't wait for the fireworks when it finally goes BOOM!

mayhem_korner's picture



Even the 15 year averages on the comp table include inflated valuations.  So this is saying equities are overvalued relative to bubble valuations.

pragmatic hobo's picture

it all depends on how much corporations can borrow so they can buy back shares ...

ejmoosa's picture

Home Depot, Darling of the DOW, earned 5.838 billion in 2005, and traded at a high of $44

Home Depot, Darling of the DOW, earned 5.330 billion(est) in 2013 and traded at a high of $82.57 last week.


When will then actually start earning MORE money?



Current profit per share -total debt per share 2005:  1.46

Current profit per share -total debt per share 2013: -6.78

Rising Sun's picture

Go fuck yourself JPM - fucking rodents

Colonel Klink's picture

Yes but the rodent wears presidential cufflinks and IS RICHER THAN YOU!

El Hosel's picture

LOL, "JPM Rodents"    Shot through the heart and your to blame, you give Rats a bad name.

sbenard's picture

LET'S PLAY A GAME! It's called Identify the Bubble!

Which of those stock market bubbles in that first chart is NOT considered by Wall St to be a bubble today?

Hint: It's the BIGGEST one!

Hint #2: It's the CURRENT one!

And take note: The last three stock market declines dropped to about the level of 600. AT current prices, that represents a 2/3rds decline for stocks. Imagine the impact on all those retirement accounts!

Platinum's picture

I really think that bubble is on a short timer. If I were a student debtor I would not work. Instead, I'd collect handouts from government, and get my payments set up to $0/mo because of lack of income after basic living expenses.

Regardless, most people won't be able to repay their loans, including too many people I know. What a pity so many of them don't realize it.