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S&P 500 Hits Goldman Sachs Year-End 2,050 Target
It's been quite a year for David Kostin and his flip-flopping Goldman equity strategy team. From a modest 1,900 year-end target in January (reached in May) to warning stocks are 30-45% overvalued in January to projecting the S&P 500 will reach 2,050 by year-end in July...Mission Accomplished today, 6 weeks early. Now what?
Mission Accomplished...
Just ignore his warning in January...
The current
valuation of the S&P 500 is lofty by almost any measure, both for
the aggregate market as well as the median stock: (1)
The P/E ratio; (2) the current P/E expansion cycle; (3) EV/Sales; (4)
EV/EBITDA; (5) Free Cash Flow yield; (6) Price/Book as well as the ROE
and P/B relationship; and compared with the levels of (6) inflation; (7)
nominal 10-year Treasury yields; and (8) real interest rates. Furthermore,
the cyclically-adjusted P/E ratio suggests the S&P 500 is currently
30% overvalued in terms of (9) Operating EPS and (10) about 45% overvalued using As Reported earnings.
Reflecting on our recent client visits and conversations, the biggest surprise is how many investors expect the forward P/E multiple to expand to 17x or 18x.
For some reason, many market participants believe the P/E multiple has a
long-term average of 15x and therefore expansion to 17-18x seems
reasonable. But the common perception is wrong.
The forward P/E ratio for the S&P 500 during the past 5-year,
10-year, and 35- year periods has averaged 13.2x, 14.1x, and 13.0x,
respectively. At 15.9x, the current aggregate forward P/E multiple is
high by historical standards.
Most investors are surprised to learn that since 1976 the S&P 500
P/E multiple has only exceeded 17x during the 1997-2000 Tech Bubble and
a brief four-month period in 2003-04 (see Exhibit 1). Other than those
two episodes, the US stock market has never traded at a P/E of 17x or
above.A graph of the historical distribution of P/E ratios clearly
highlights that outside of the Tech Bubble, the market has only rarely
(5% of the time) traded at the current forward multiple of 16x (see
Exhibit 2).
The elevated market multiple is even more apparent when viewed on a median basis. At 16.8x, the current multiple is at the high end of its historical distribution (see Exhibit 3).
The multiple expansion cycle provides another lens through which we
view equity valuation. There have been nine multiple expansion cycles
during the past 30 years. The P/E troughed at a median value of 10.5x
and peaked at a median value of 15.0x, an increase of roughly 50%. The
current expansion cycle began in September 2011 when the market traded
at 10.6x forward EPS and it currently trades at 15.9x, an expansion of
50%.
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year end upgrade t0 2250. Why the hell not. Its all make believe.
As is Father Christmas !
Watch this recent surge higher from "Bullards" comments retrace and represent the peak of a medium term head and shoulder pattern......
As is Father Christmas !
Watch this recent surge higher from "Bullards" comments retrace and represent the peak of a medium term head and shoulder pattern......
Monster Wall Street bonuses. The Federal Reserve members looking for future jobs have reserve places in the top Wall Street firms as thanks.
I never believed in magic until I saw this market in action....
Still waiting for GS prediction to come true of $1050 for AU this year.
for all the jokes, Biryani and his accursed ruler were right.
Well readjust upward of course. Let's say 2200. And if that happens next week. Then we go for 2500.
Why bother with these pesky price targets? Since we all agree a higher stock market is good for the overall economy, let's take this bitch up to 3000. I mean, why not? It's just a number, right? Think of all the good it will do for the low & middle class! It's in the public's best interests. Just think of all the fantastic inflation it will unleash. LOL
Listen EYE.
Exactly. Don't hold back. It's good for everyone! Rally time!
The flip-flopping Goldman equity strategy team's missives bear a striking resmeblance to Central Banker jaw-boning. Coincidence?
Gartman Field Theory (GFT) thesis is being written by Cramer and funded by CNBC.
Stuffing is in it and timely for Thanksgiving.
GS like any confidence scheme needs to keep fast talking the market to keep the sheep handing over their money and since they are the biggest power player out there they can go full ponzi for a long time.
"We're gonna need a bigger target."
So the new target is 2100 by year end. Got it , thanks squid.
Now all they need is their 1050 gold target.
Five five that, and let every thing else burn, winnings what counts...
Goldman! Goldman! Gods Work .
Price target -> Up
OK, I got the pattern now. They announce a price target, the market sells off for a few weeks, then climbs right back to beat it.
I can imagine the phone call in this last case: "Hey there, Bullard. Um, we need your help here... we're gonna look like fools. Can you do something about this? Thanks... the check's in the mail."
you'll never find me defending an analyst but honestly....they guys are correct. The S&P is over valued 30-50%, but it will continue to increase. you can't forecast a bubble pop, but it always grows...until the one day it doesn't.
'These guys are correct'.....well, GS is the Fed, so.....
Levitation achieved, now gravity sets in as it always does.
It's hard to stand-up this market.
Floating on a sea of Federal Reserve liquidity. Print until there's a flood.
SPXU target 2050. Name it and claim it.
And while this is going on, here's what "Business Insider" is up to:
http://www.businessinsider.com/mcdonalds-secret-menu-real-2014-11
It's good that we're all paying such close attention. /sarc
double
Aren't they just begging everyone to short this?
It might be the correct thing to do, but the problem is being faster than a front-running HFT computer or get muppetized.
Maybe it would be better and easier to sell a banker's organs?
Listen Zero's.
The USSA stock market is wrapped up tight in the US FED's security blanket. Everything is going to be just fine. I promise.
what time do Ferguson riots start, got one bag of microwave popcorn left maybe I should add to my position
Now what? How about roll out some guillotines and lop off some GS heads?
Hey! It's fuckin cold out! Shouldn't stawks be going down?
is today a bank holiday or something? volume seem very low so far.