"The S&P 500 Is Now Overvalued On 18 Of 20 Valuation Metrics"

Tyler Durden's picture

After last week's brief FBI "memogate" inspired volatility spike, some have asked if the resulting market decline (down a "whopping" -0.4% on the week) has made stocks more attractive. Here is the quick answer according to Bank of America: based on the 20 most widely used valuation metrics, the S&P remains significantly overvalued on 18 of 20 valuation metrics, the only exceptions being free cash flow, helped by depressed capex), and relative to bonds, whole yields are depressed thanks to $18 trillion in global central bank purchases.

And a bonus chart: why is the market so overvalued? Because 2017 has continued the trend seen in 2016, when the market "shrugged off one event after another."

One wonders what happens when all the "event gaps" start getting filled...

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
spastic_colon's picture

so basically the only 2 metrics the fed pays any attention too right?

when the market "shrugged off one event after another."

the market???

This is it's picture

No worries.. It can be over valued on another 15 indicators. 

remain calm's picture

The Market is over valued because the CBers have no other option. Its going higher as long as they keep pushing the right buttons. Just that simple

FreeShitter's picture

The transfer of wealth to the select few will and must continue until the sheeple are tired of being fucked in the ass daily w/o lube. Will they eventually rise up? 

The_Juggernaut's picture

There's no more bullish indicator than ZH predictions of doom.

johngaltfla's picture

And if we had honest accounting practices then the multiples would be far, far worse. This market is overvalued on every historic metric if the accounting methodology used were comparable to reality based methods in the past. When this hits the fan, alot of computers will be replacing a lot of accountants and they too will be swept into the dustbin of history like buggy whip makers.

stitch-rock's picture

....and then: tail risk, beoytch

CBs computer modeling programs noticeably
ignore events at either end of the bell curve.
Some symptoms include seven to ten sigma events
and moves almost daily...a five sigma event is statistically supposed to happen once every
13,932 years...lolz

When it gets to 20-25 sigma events daily, then its time
to tank again:

"The paper reminds us that the 25 sigma quote came from David Viniar, CFO of Goldman Sachs, who actually said in the Financial Times in August 2007 that

We were seeing things that were 25-standard deviation moves, several days in a row."

slimycorporatedickhead's picture

Reading this article makes me want to borrow money to buy amazon! those 1% profit margins are too good to pass up

wmbz's picture

This is very good, very bullish news!

We can make it 20 of 20. Onward and upward!

Golden Showers's picture

Just get more metrics.

order66's picture

"Only care about yield" Drink.

Golden Showers's picture

"Only care about drink" Yield.

HyeM's picture

when you consider the fake earnings via accountating gimmicks and CB liquidity...

...the S&P is now overvalued on 32 of the 20 Valuation tricks metrics   ...

Dilluminati's picture

I don't buy the argument that the market is sound.  Funny how people are in respect to believing what is convenient to believe.


Five Star's picture

Here is one: US Stocks are now worth 25% more than the actual US economy.


MrNoItAll's picture

The FED and Central Banks ARE "The Market". Screw fundamentals. Which printing press is spitting out the digital fiat and how much it is spitting is ALL that matters. Until it doesn't. Getting close?

MrSteve's picture

Which press is spitting out does not matter as the CBs are coordinating their print orders on a rotating basis- SNB, ECB, FED, PBOC, BOJ. Fiat is like gold: it doesn't matter where it is mined / printed, once it is out in the wild it just like any other piece of gold / fiat.

Trucker Glock's picture

I want to see S&P vs. median income from 1960 to present.  Prefer YoY, but average will probably tell a story.  Maybe a chart showing how many S&P shares median income could buy 1960 to present.

Would also like to see median home price vs. median income.

And number of Snickers bars median income will buy YoY, adjusted for reduction in size in oz. of Snickers bars.

christiangustafson's picture

It's time for the S&P 500 to test its 200 DMA.

Hongcha's picture

Boys, the top went in on Tuesday morning, May 16, 2017.

christiangustafson's picture


And guess what?  The Brexit lows (1991 SPX) are precisely at the halfway point between the high at 2405 and the previous high at 1576 in the Year of Our Lord 2007.

Can you say head & shoulders top, with 1991 as the neckline?


ThanksIwillHaveAnother's picture

LOL LOL LOL LOL LOL LOL LOL LOL...(keep repeating).

Haitian Snackout's picture

In 2016 the printing press shrugged off one event after another. There, fixed it for ya!

starman's picture

"Free cash flow" Right! 

yogibear's picture

Who cares about metrics in a rigged market?


Zorba's idea's picture

OVERVALUED? Not according to Non-GAAP standards. Onward Janet!