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Just One Question For Janet Yellen: Are Valuations Still 'Quite High'?
Dear Janet Yellen, while we sympathize and realize you are still dazed from your marathon two-day FOMC session in which you must have been utterly exhausted to describe the chart below...
... as "business fixed investment has been increasing at solid rates in recent months", we had one question.
Back on May 7, when responding to an audience question in Washington, you said that "equity-market valuations at this point generally are quite high... there are potential dangers there."
We only ask because on May 7 the S&P was at 2088... exactly where it is trading as of this writing. However, back then S&P500 sales were far higher as the collapse in commodity revenues had not been fully priced in.
And since in this day of double-seasonally adjusted non-GAAP "EPS", reported earnings are anythjing anything but, we decided to go with the one metric companies can't fabricated: sales.
Here is our question: on May 7, the Price-to-Sales ratio of the stock market was 1.8264x. As of this moment it is higher at 1.8408x.
So, dear Janet, can you please confirm what the chart above shows, namely that "equity market valuations" are now even higher than when you said they were "generally quite high", and if so, should we still be buying stocks and why? And also, if stocks are bought and the market tumbles again, do you promise to make everyone's losses whole following valuation statements such as this one from Fed president John Williams: "FED'S WILLIAMS SAYS U.S. STOCKS AREN'T OVERVALUED"
Thank you.
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All assets are expensive compared to income, barring silver.
If you like silver now @15 you are gonna love it in two years @5!
What are you asking her for?
her response:
let me be clear that negative interest rates fed equity market put blurp bleat nirp huzzah forecast was not something that we considered very seriously at all today…
who's to say that the price to sales ratio is not fudged and perhaps much higher? i mean, the guys who calculate this are FACTSET and S&P - hardly unbiased. most every company nowadays speaks of "constant currency sales" or some BS to that regard which assumes some foreign exchange rates of their liking, instead of reality and GAAP.
With all the noise and dust coming from every quarter only the buyer can make the decision on whether to buy or sell. Due diligence is now anyones guess. You pays your money and takes your chances, as always.
If a valuation is quite high, is that the same as paying way more than you should?
and is *that* the same as saying "we're pretty fucking far from a free market, folks?"
Well the platinum miner I'm invested in recently dropped to an all time record of .22 per share. Is that "quite high"?
I'm waiting for Toto to come along and pull the curtain back.
Trying hard to think of what Yellen has done over the last few years that my invalid mother-in-law is not capable of.
Valuations are still 'quite high'?
http://i.imgur.com/8EOl1fn.jpg