"If Everyone Is Bearish, Why Is The S&P Trading At 20x?"

Two weeks ago, bearish Bank of America finally capitulated, and after stubbornly - and proudly - wearing the badge of biggest Wall Street bear, the bank's chief strategist Savita Subramanian finally gave up and turned bullish, raising her year-end S&P price target from 4,000 to 4,300 and providing a bunch of goalseeked rationalizations for the upgrade - similar, but opposite, to the justifications she had presented up until that point to explain why she remains one of Wall Street's biggest bears, and demonstrating vividly just how easy it is to flip from one extreme to another, especially when one has been steamrolled by momentum for much of the past year (much more in the full note available here).

Yet while Savita had no qualms about saying an abrupt goodbye to her long-held bearish view, Bank of America's clients have found it not quite so easy to rotate their portfolios and put on their pink sunglasses, and so many of them remain bearish.

Which is why as Subramanian writes in her latest Relative Value Cheat Sheet (available to pro subs), the one question she is getting a lot from clients is "why are stocks trading at rich valuations if sentiment is so negative, if everyone is selling stocks and buying bonds and cash" (alternatively, one can ask - as we do every month - just how useless are all those Wall Street polls which reveal not what people are doing, but what they think, or wish, they should be doing).