Are Stocks Cheap?

Zero Hedge ^ | 5/11/2014 | Tyler Durden

[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!

Source: Gavekal

 

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...

 

[RightGeek]

So what do you think?

[Insigne123]

Money’s cheaper

[BipolarBob]

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.

[Fungi]

Of course they are, as long as the Fed keeps printing money. But I have a question, where does this printed money go? Who owns it? Do they have to pay it back as the Federal govenrment (meaning taxpayers) does? “Quantitative easing” simply means inflating the money supply. Why it has not resulted in price increases is interesting. The newspapers always used to have figures on M1, M3, etc. No longer, they do not care or they know the figures are meaningless. My two bits.

[Mike Darancette]

Looking for that Market 7 year itch?

[Cringing Negativism Network]

Bring back manufacturing to America.

That is what I think.

[HiTech RedNeck]

Stop sapping it with obscene taxes.

[gleeaikin]

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.

[MeneMeneTekelUpharsin]

Yamana Gold (AUY) is way overpriced. Set to fall.