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Stocks Have Never Been More Expensive Based On Long-Term Growth Forecasts
As the S&P 500 pushes towards Goldman Sachs 2,100 year end target (for 2015!!) today, we thought it worth considering just how much awesomeness has been pulled forward, priced-in, exuberantly-chased. As the following charts show, based on bottom-up long-term-growth expectations, S&P forward P/E valuations have never been higher. But that's not all...
The current Forward P/E of the S&P 500 is dramatically higher than is the 'norm' given bottom-up long-term growth forecasts... in fact, given current growth expectations, stocks are the most expensive ever...
Either valuations need to drop by 3 turns or long-term growth expectations need to rise by 3 turns (magically out of nowhere) for valuations to return to their highly correlated 'norm'
But... it's not just P/E that is getting extreme...
And margins continue to test historically stratospheric levels...
Of course, it's different this time and underlying fun-durr-mentals will gently rise (along with interest rates) to bring valuations back to norm and we all live happily ever after...
Source: @Not_Jim_Cramer
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Magic numbers everywhere and they are less and less useful in the real world.......
Of course they're high, they can only go UP!!
It's all Bullshit!!! Happy New Year!
I call Bullshit on this article. 9 out of guests on CNBC say the market is fairly priced. Surely i have to take those guys word over some ZH article?
Good for plumbers
I know high PE ratios mean stocks are too high.
But what some are fogetting is the VIX is high as well, and dropping hard into end of year. CLICK HERE FOR THE CHART [bullish for markets]
What investors are forgetting with stocks high, and profits soaring, and with lower oil, its like a tax cut and actually the current valuations lower. So that means the stockmarket is lower value or FAIR valued right here right now.
Stop woth the "tax cut" myth. That has been thoroughly debunked here... several times. ZH comment section seems to be turning into a blog advertising service for every piss ass trader out there.
don't they call that the Insana effect® ?
How many idiots mistook a Fed induced bubble for 'trading success' at the top of the last 2 bubbles?
It's another measure of bubbliness in markets: the number of 'newsletter' writers with 'a system'.
i call them road-kill in training.
Most expensive stock market ever and people think it's going higher. Tip a canoe time.
Market rises during deflation.
If demand rises during deflation what happened to Japan for ten years?
anybody remember when the normal PE was 7?
market rises during inflation
fixed it for ya'
but why not just say "the market rises..." because it's the only thing keeping this hollowed out barge of a banking system afloat. call a spade a spade.
Damned if u do. Damned if u don't.
The Federal Reserve says Skittle pooping unicorns are possible with it's mark to fantasy accounting principles.
"Taste the rainbow!"
The way I understand this article is that the blow-off top is still coming.....
The chartsreally do not look that extream to me....
This from a person who shorts 70% of the time....
I short 90% of the time...have had my ass handed to me for 5yrs now,I know every pimple on it!!
It's a litte off the mean but within about two sigma, but mostly it's different now that the Fed owns us all.
EVERYBODY PLEASE READ MY STUPID BLOG Overpriced by 3 notches is really not that bad. The true extent of overvalued is by looking at long term PE ratios as well as profit margins. Profit margins are extremely mean reverting, and they're an important part of cyclical earnings. To look at earnings without looking at profit margins is just silly.
Could someone post a chart showing how many ZH bearish articles have been correct?
could someone post a chart of how many idiots on ZH think this is an 'investing advice' site? the number seems to be rising by einf lately.
observations about the market are just that, and ZH does well to put them into some historical context.
what those idiots don't seem to get about the oncoming crash into a tree is that the earlier it is noticed, the more evasive procedures can be taken to avoid it.
"whatever it takes" doesn't pop up when the sun is shining and unicorns are shitting Double-Doubles with strawberry shakes.
It's not that stocks have never been more expensive---
it's that the "US dollar" has never been more intrinsically worthless to hold on to.
Tulips were the hot ticket item in the early 1600's for the Dutch
I believe the yield on stocks has been smashed so low that we'll finally see some of the fundamentals and tremendous divergences (HYG & XLE) start to take over.
a 'turn'...how big is a turn?
Is that technical term or a typo?
Somewhere in the neighborhood of a "handle"?
Stocks will find a peak soon, as has every other asset class already...
http://www.globaldeflationnews.com/sp-500-indexelliott-wave-update-for-w...
http://www.globaldeflationnews.com/dow-jones-industrial-averageelliott-w...
Poor thing, praying for a collapse since january 2009 and being wrong since. You must go insane by now. Or out of money at this point.
"Stocks Have Never Been More Expensive Based On Long-Term Growth Forecasts"
<sigh...> Bullish.
Sadly the markets are no longer based on economics and company performance. They are based on trading algorithms to get in and out before the momentum kicks in large gains or losses. They are also based on the Fed "printing" money to flood into the markets as well as zero percent interest rates - there is nowhere else to go for a decent return on investment. At some point this will change. Whomever has the best trading algorithm to recognize it first wins. In the mean time, being in the market wins - until you don't get out soon enough. Although the Fed might just guarantee the markets forever - as they have been doing - QE infinity!...