Skip to comments.Are Stocks Cheap?
Posted on 05/11/2014 7:12:00 PM PDT by RightGeek
As if the question actually needs to be asked, we thought the following 3 charts would provide at least some defense against the constant barrage of "healthy rotation" bullshit currently being used to maintain assets-under-management as professionals unwind their levered longs into a newly-willing retail public. As Gavekal notes, the following chart show that the median stock is trading at valuation levels only seen at the previous stock market highs of 2007 and 2000.
Measuring the valuation level of the median stock in an index can help mitigate the market-cap-weighted bias associated with many index level valuation statistics. This is important because index level valuations that are heavily influenced by a handful of large companies can give a misleading representation of prevailing valuations for most stocks.
In the below charts we show the median valuation for stocks in the MSCI World Index (red line, right axis) and compare it to the Index price (blue line, left axis).
Are Stocks Cheap?
Price-to-Sales - Nope!
Price-to-Earnings - Nope!
Price-to-Cash-Flow - Nope!
The median stock is trading at valuation levels only seen at the previous stock market highs of 2007 and 2000.
So are stocks cheap? It seems the professionals believe NOT...
As the smart money flees...
and the institutions dump...
I think we’re on an economic treadmill and if you’re not running full steam ahead you’re falling behind. The Zero Interest Rate Policy is killing savers and fixed income people. Buy and Hold doesn’t work anymore. If the penalty wasn’t so high I’d draw everything out and go to the casino and bet it all on the roulette wheel.
I say we’re close to 1929.
You know, when FDR went on television and didn’t talk about the princes of greed /Joe Biden.
Looking for that Market 7 year itch?
Bring back manufacturing to America.
That is what I think.
Stop sapping it with obscene taxes.
I have a house I want to sell in an appreciating area, but I am afraid of what I would do with all that cash. But I’m at an age when I want to simplify, so feel nervous and stuck.
Yamana Gold (AUY) is way overpriced. Set to fall.