Stocks Are Officially More Overvalued Than During The Last Bubble Peak

Tyler Durden's picture

Over the weekend we showed that when it comes to fugding what one means by EPS (GAAP, non-GAAP, Pension accounting adjusted, etc), there is a virtually endless spectrum how one can make what is now effectively a 20x LTM P/E market appear as a "reasonably" valued 16.5x. But while fudging snapshot earnings is one thing, presenting an "apples-to-apples" valuation trend based on any one given methodology is something different, and provides a much needed continuum of (over) valuation. Which is why we go to the just released Q3 Guide to the Markets released by JPM Asset Management where we read the following:

  • Current forward S&P 500 P/E: 15.6x
  • Forward S&P 500 P/E on October 9, 2007: 15.2x

Needless to say, this assumes the current consensus for Non-GAAP earnings growth is accurate, which as we explained previously is driven almost entirely by "one-time charge" addbacks: addbacks which traditionally peak just before recessions strikes.

But all of the above is "noise" to quote Janet Yellen. One quick look at the chart below and it becomes immediately clear that the 190% surge in the S&P since the 2009 lows has been entirely on the $10 trillion (excluding China's $25 trillion in new financial debt) in central bank created liquidity.

And some additional equity valuation metrics now vs "then"

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newsguy68's picture
Round Up Of Retailers Closing Locations Or Going Bankrupt In 2014
Say What Again's picture

In December 1996 the PE(fwd) was 16 and the SP500 went roaring on for 3.5 moar years.  We're only at 15.6 now, so we have at least 3 moar years of the BS Yellen induced market.

wallstreetaposteriori's picture

Agreed... foreward earnings could go to the fucking moon before anyone really gives a shit...  The talking heads will find anyway possible to keep the herd moving...

nope-1004's picture

In '08 the market was headed for zero.  The Fed bought in and bought everything up with their algos.  Now we have it "overvalued".  Huh?  How can the guy fixing the horse race win by too much of a margin?

There is no free market.

Say What Again's picture

Sounds like the plot from an old gangsta movie

hedgeless_horseman's picture



Stocks Are Officially More Overvalued Than During The Last Bubble Peak

Mission accomplished!  You can take the rest of the year off, Janet.

Also, how do I hire Todd Martin?  He is either a prophet, or has awesome inside information from 33 Liberty.  Either way.


The only other Wall Street insider I know of with a better crystal ball than Todd is this guy...

Mar 4, 2009 - President Obama said Tuesday this might be a smart time to buy into the stock market.
"What you're now seeing is profit-and-earning ratios [he means price-to-earnings...damn telepropmptor] are starting to get to the point where buying stocks is a potentially good deal if you've got a long-term perspective on it," Obama said Tuesday.


I am waiting for these two pros to tell me when it is time to sell.

Say What Again's picture

Since, Oct 4th 2011, the SP500 has been growing at a CAGR of 21.5%.

Has you income been growing at that rate?  Never-mind.

How has the cost of living gone up in that time frame?

BaBaBouy's picture


Donald Duck gold coins sold out ‘in minutes’ Editor | July 2, 2014

2014 80th anniversary of Donald Duck gold and silver coins in presentation case.

One thousand Donald Duck gold coins made by New Zealand’s and Australia’s Mints sold out in the first 10 minutes after their release last week and are now being traded on auction websites for a 100% profit.

According to the mint, the only remaining ones are silver coins, which —just like their bullion version— show the Disney character as it appeared for the first time 80 years ago, wearing his trademark sailor suit and bow tie, in “The Wise Little Hen” (1934).

Donald Duck gold coins sold out ‘in minutes’

Coin collectors seem to be among the few ones who have not lost their faith in gold. The Donald Duck coins follow gold and silver ones released in April, which depicted Mickey Mouse and that also sold out within days.

Experts believe that, beyond collectors push, coin sales have been lifted by gold's reputation as a safe haven. As inflation increases, the value of money drops and the prices of all goods increase. Consumers prefer to hold gold instead of cash during these periods as gold acts as a value retainer for them.

AlaricBalth's picture

Today the S&P 500 Price Sales Ratio has equalled an all time high.

An advantage to using the P/S ratio is that it is based on sales, a figure that is much harder to manipulate and is subject to fewer accounting estimates than earnings.

3:34 pm EDT, Wed, 2 Jul 2014

Current S&P 500 Price to Sales Ratio: 1.77 +0.00 (0.03%)

Mean: 1.37 Median: 1.42   

Min: 0.80 (Mar 2009) Max: 1.77 (Dec 2000)

Oldwood's picture

All PE is not created equal.

Handful of Dust's picture

Ya mean FB is not a buy at 86 PE ?

And AMZN at 519 PE ?


What could go wrong?

SheepDog-One's picture

Anyone who actually believes the real P/E of S&P right now is 16, is an idiot.

CrashisOptimistic's picture

What's the GAAP P/E?

Since non GAAP earnings are excluding one time and unexpected items, how do you do a "forward" computation, given the one time items are unpredictable. 

If they are known and predictable, why aren't they audited?

Harbanger's picture

All the stocks I kept in the market are losing.  Mining, metals, oil, etc. and Dow shorts.  I may as well leave them in, although with my luck the broker will go bankrupt before I can sell.

game theory's picture

SIPC protects accounts to $500k [that is, assuming you think they'd be solvent in a massive fraud perpetrated by all brokers].

midtowng's picture

This article is confusing me with numbers and facts

Say What Again's picture

I know what you mean. I can't stand looking at numbers.

I miss Diane Sawyer telling me everything is great in the world and the instant index telling me about some new dog, and a little girl that just made a shirt for the president, and all that feel-good shit.

max2205's picture

Wish you told me to hold till 15.6 frwd pe...


Damn you

wallstreetaposteriori's picture

Which means the discounts are coming!  GDP bump!

ebworthen's picture

Things have to be bad if Piggly Wiggly is closing two stores.

And I mean BAD!

-.-'s picture

Which way did they go George?

youngman's picture

all talking about 20,000 on the dow now...its to the moon...why not..nothing else to invest in..PMs are the forgotton son...the black sheep...

SheepDog-One's picture

The central banksters will pull the trap door again when it best suits them, as usual.

Grande Tetons's picture

THis is the LAST bubble, right? I mean when this baby pops it is game over as far as we know the game to be. 

No point for a 10 percent pullback now....just fucking crater the pos and get it over with. 

NOTaREALmerican's picture

Of course not.   Isn't everybody on here going to wait for the 50+% "correction" and then go all in and our DNA-bling will rule the earth?  

That's the plan, right?


Grande Tetons's picture

You are reading from the 2009 playbook, hippy. 

tarsubil's picture

You know if it corrects by 70%, why not? The money has to go somewhere.

max2205's picture

At this point there is no level I'd go all in...
They have out olded me....we'll played Fed

p00k1e's picture

Nah, that one gold coin in the shoebox will be used to buy 40 miles of virgin shoreline on Lake Michigan.

caShOnlY's picture

THis is the LAST bubble, right?

Athough the markets are bubbling - the mechanism is a PONZI perpertrated by another PONZI - the U.S. Dollar!  every PONZI we have is playing off the DOLLAR!!  

Add it up:  all the govt prepping, militarizing the police, NSA, etc...  When the dollar blows: the markets are gone taking out 401(k)s, etc., Social Security PONZI is exposed and killed, Education PONZI collapses, all at a time when BOOMERS thought they were going to be able retire comfortably and in peace - WRONG!!

anyone seen this?

go here and see what is missing from the above  (search for: G20, G7, numerology. Also search "entire" and notice it is italicized).

LawsofPhysics's picture

July 20th is the reset you say?  We will hold you to that call.

Personally I think you are being terribly optimistic.

Tall Tom's picture the "optimism".


However the truth is that the reset has been happening continuously since the 2008 crash.


The reset is not an instantaneous one time event but it is a continuation...a process.


When the US DEFAULTED ON GOLD back in August, 1971, the World was in limbo for a couple of years before the Dollar was backed by Saudi (and OPEC) Oil.


That entire time was a resetting process from Bretton Woods to the Petrodollar.

LawsofPhysics's picture

Precisely why he is being optimistic.  What real resource do the E.Z. countries have to "back" any new currency with?  It is a fiat world now and has been for 40+ years.

Tall Tom's picture

ZERO RESOURCES except Human Chattel.


I just appreciate your good snark.


The point is that the reset is happening continually. There is not a set date for it.

LawsofPhysics's picture

Yes, evolution is always happening. It can happen slow for a long time, then it can happen "all of a sudden".

Tall Tom's picture

Yeah. Exponential Collapse and all o' that. I am not writing that it will not happen that way but, to the contrary... (Shocks WILL happen just as it did in the early 1970's. Remember the first "Energy Crisis" in 1973?)


But there is no set date. Anybody whom tells me a set date I tend to look at with some healthy skepticism.

skidsmango1's picture

Watched the video.  First thought was she looks like and talks like Alan Greenscam in drag.

This I can't wrap my mind around - why do the people who designed the system, that they are now getting ready to blow up, need to use coded messages to tell each other when it is going to happen?

If the numerolical references are intentional, I can't believe this is 'their' way of passing information.  Don't they just whisper the stuff to each other while giving a reach around?

Is this just more of the misinformation game???



BringOnTheAsteroid's picture

Complete, unadulterated garbage. Numerology, pffftttttt. Next we're going to start talking astrology.You hit the nail on the head, with "why don't they just email each other". BINGO, you can now stop thinking about this crap.

What is happening to this forum.

skidsmango1's picture

Watched the video.  First thought was she looks like and talks like Alan Greenscam in drag.

This I can't wrap my mind around - why do the people who designed the system, that they are now getting ready to blow up, need to use coded messages to tell each other when it is going to happen?

If the numerolical references are intentional, I can't believe this is 'their' way of passing information.  Don't they just whisper the stuff to each other while giving a reach around?

Is this just more of the misinformation game???



Himins's picture

She refers to the G7, on janurary 14th, while officialy the G8 hadn't really been reduced to the G7 until March 25th or so this same year. I'm not sure how to read that.

skidsmango1's picture

...nothing against numerology, but she didn't convince me she knew what she was talking about.  Or, her speech writer didn't.  Feels like a more elegant type of fear porn....

you enjoy myself's picture

no one could have seen it coming.  btw, is the market on today?  this complacency is both disturbing and hillarious.

globozart's picture

Someone forgot the difference in newly printed money in this chart. FED balance sheet.

buzzsaw99's picture

i'm happy as a clam with 1975. i'll take it.

o.t.p.s's picture

Well, at least we wont`have any inflation worries anymore after the crash of all crashes

Tall Tom's picture

Not true.


The choice between a Defaltionary Meltdown or a Hyperinflationary Inferno has yet to be decided. They, TPTB, have done nothing short of a miracle to have delayed the consequences of the 2008 Collapse for as long as they have.


But the debt must either be retired or paid.


The path has not yet crystallized.


Either path ultimately leads to deflation. Both paths ultimately lead to a lot of pain and destruction.


Many will perish...and I mean that literally and not figuratively...and the suffering upon all of the people will be great for the overindulgences of the Financial Fraudsters...the few.


After the next crash they will have to make a painful decision...There will not be enough capital, political, or financial, to bail it out again.


If they choose to let it go then deflation will be our lot.


If they decide to attempt to save it then it will be hyperinflationary. The hyperinflationary route is the least painful in the short term but the most painful overall as there will be a deflation which follows it, guaranteed. There will be no common currency as that will have been destroyed.


Unfortunately there will be no other foreign currency as a backstop because this time it is GLOBAL as all fiat currencies are subject to the forces of the destruction of the US Dollar.


We are fucked. From the front, or behind, it matters not as we are just as raped from the TPTB homos.


So do you choose to get ass raped from the front or from the rear? There will be no K-Y JellyTM to ease the entry, no liquidity worth a damn. There is no difference as you are just as reamed.


TPTB need to die miserable deaths by torture as that is what they have inflicted upon us all.

Squid Viscous's picture

forward earnings, projected by sell side cum swallowers , i always trust their predictions

Grande Tetons's picture

sell side cum swallowers

I am going to reluctantly add this poingnant term to my home schooling curriculum.....for the senior year...when the term sell side is not so disgustiing. 

JustObserving's picture

All resources of the state are being mustered to levitate the stock markets which sustain the US economy, unsustainable debt and dollar hegemony.  It will not last for long.