I was somewhat surprised by a Bloomberg article discussing how cheap the S&P is (mentioned here this AM). Its not that Bloomie has suddenly become a cheerleader, but rather, this piece reflects the beliefs of a large chunk of classically trained value mutual fund managers.

Here’s a Bloomberg excerpt:

“At 1,176.80, the S&P 500 is trading at 10.8 times analysts’ forecast for profits in the next 12 months of $109.12 a share. For the P/E ratio to reach its five-decade average of 16.4 without shares appreciating, earnings would have to fall to about $71.76 a share, 22 percent below the last 12 months, data compiled by Bloomberg show.

Should companies meet analysts’ profit estimates, the S&P 500 must advance to about 1,790 to trade at the average multiple of 16.4 since 1954, according to data compiled by Bloomberg. That’s more than 50 percent above its last close. Futures on the S&P 500 expiring next month gained 1 percent to 1,185.9 at 7:48 a.m. in London today.” (emphasis added)

Of course, left unsaid is what if analysts estimates are too high; Historically, the fundie community has overestimated earnings growth by a factor of 2X.

Also unsaid was the impact of recession on earnings. A 22% drop during a recession is hardly a Great Depression collapse; its not even a Great Recession drop. Indeed, that line of thinking ignores the overhang of housing, the deleveraging consumer, and tight credit conditions — all of which could easily persist for years to come.

Bottom line: The Reagan Recession came at the end of a 16 year bear market, plus benefited from Volcker breaking the back of inflation. The threat today is a Japan like deflationary spiral, including falling asset prices and an unwillingness for investors to buy up for a dollar of earnings.

In other words, a falling P/E could be evidence of an ongoing deflationary phase, and not proof that markets are cheap.

>

Source:
S&P 500 Falls to Reagan Recession Values
Inyoung Hwang
Bloomberg Aug 29, 2011 2:49 AM
http://www.bloomberg.com/news/2011-08-29/s-p-500-trading-at-reagan-recession-valuations-after-losing-2-3-trillion.html

Category: Investing, Psychology, Valuation

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

61 Responses to “Is the S&P500 Cheap?”

  1. wally says:

    There is such a drumbeat now of negative views for the market – based on apocalypse views of the world economy – that I’m starting to mistrust them. The people who got the credit bubble collapse ‘right’ are not necessarily the people who will get the next prediction right, nor the next after that.
    We all have a tendency to re-fight the last war and I think we are now seeing some of that.

  2. Nuggz says:

    I don’t see a deflationary phase…..anywhere.

    Housing has overshot to the negative. The rental market tells me something completely different about the demand…which is high.

  3. dougc says:

    CAPE is a much better predictor of stock prices than anaylst predictions of future earnings.

  4. machinehead says:

    Dr. John Hussman regularly takes apart Wall Street’s shallow analyses of market valuations. Last week he wrote:

    Wall Street analysts continue to characterize stocks as cheap on the basis of completely specious approaches like “forward operating earnings times arbitrary P/E multiple,” or worse, “forward operating earnings yield divided by 10-year Treasury yield.” Unfortunately, despite a few anecdotal successes, there is no correlation between “valuation” on these measures and actual subsequent market returns.

    There are numerous reasons why these toy models based on forward operating earnings are misguided, but the four most important ones today are:

    1) Forward operating earnings presently carry the embedded assumption that profit margins will achieve and indefinitely sustain the highest profit margins observed in U.S. history;

    2) The duration of a 10-year Treasury bond is only about 8 years, while the duration of the S&P 500 is about 42, meaning that any given yield increase implies 5 times more loss for stocks than it does for bonds, and there is no reason in the world why investors should treat those risks as equivalent;

    3) The current conformation of evidence strongly suggests the likelihood of an oncoming U.S. recession, and forward earnings expectations tend to be stunningly off-base in those instances, and;

    4) The norms typically applied to forward operating earnings are artifacts of the recent period of bubble valuations, and use norms for “trailing net” as if they are equally applicable to “forward operating.” In fact, the correlation between forward operating P/Es and other normalized P/Es having far longer history suggests that a forward multiple of even 12 is quite rich.

    http://hussmanfunds.com/wmc/wmc110822.htm

    Apparently the Bloomberg article makes a seamless transition from a forward earnings multiple of 10.8 to what I believe is an average trailing earnings multiple of 16.4 since 1954. That is an absolute newbie screw-up — forward multiples are only about two-thirds of trailing multiples!

    It’s like a doctor confusing systolic and diastolic blood pressure. A medic who doesn’t get that distinction would have his license yanked.

    It’s unbelievable that journalistic standards at Bloomberg are so low. You would think that a financial news network might hire journos who have actually taken Finance 101. But no — it’s still Amateur Hour at B’berg.

  5. gordo365 says:

    Seems like everyone is very negative – in part due to the recent “spiders from Mars” (debt ceiling) scare that was a totally false crisis.

    My sense is that the economist consensus that totally missed the 08 recession – is now calling the 2011/12 recession.

    I don’t believe it. I’ve recently gone long again – but will quickly change my mind again if needed.

  6. gordo365 says:

    Oh – and I especially like TBT after the “spiders from Mars scare” panic buying of US treasuries.

  7. ex1 says:

    NDX trailing ev/ebitda is at the 09 lows, ca 7.4, fwd ev/ebitda 7.6 . SP500 9.0 vs 09 lows of 8.2, fwd ev/ebitda 8.5.

  8. rootless says:

    @gordo365:

    I’m not aware that the economist consensus is calling a recession, currently. Could you provide any evidence for your assertion, please? It seems that you have gone long based on something that is solely in your head.

  9. [...] Who says equity market valuations have to rise?  (Big Picture) [...]

  10. adbutler007 says:

    Hi Barry, I couldn’t agree more.

    It is irresponsible to suggest that markets are cheap based on the PE ratios cited in this article, which are based on the ratio of prices to estimates of projected corporate earnings, and TTM earnings during a period of record profit margins.

    For one, analysts have a very poor track record of forecasting changes in earnings trends, so if we do see an economic slowdown in the next 12 months, analyst earnings estimates do not currently reflect this.

    See http://gestaltu.blogspot.com/2010/03/mythbusters-investor-edition.html

    Secondly, we only have forward PE ratio data back to 1990, which doesn’t give us much comparative history. Furthermore, in 1990 markets were already expensive by conventional valuation measures, and they have remained in nosebleed valuation territory for most of the past 20 years for reasons beyod the scope of this post. Therefore, comparing current valuations with other years since 1990 just compares current valuations with other periods when markets were also very expensive.

    See http://advisorperspectives.com/dshort/updates/Market-Valuation-Overview.php

    Thirdly, forward PE has no demonstrated relationship with short term stock market returns, and only a nominal relationship with stock market performance over longer time horizons of 5 to 15 years. According to the valuation metrics that matter, stocks are still expensive, suggesting that returns to stock market investors over the next 5 to 15 years are likely to be quite poor.

    See http://advisorperspectives.com/dshort/guest/Estimating-Future-Returns.php
    See http://gestaltu.blogspot.com/2011/08/demographic-blues.html

    The market is myopic, and analysts and economists are paid to be optimistic, but the media should take better care with their sources and analysis.

  11. gordo365 says:

    @rootless. You may be right about the “soley in your head” thing.

    I guess the “I read is somewhere on the internet…” isn’t quite the level of evidence you are looking for.

    I may have watched Nouriel Roubini, Peter Schiff, and John Maudlin too many times and interpreted them as “consensus”.

  12. Casual_Observer says:

    Barry,

    I don’t disagree. Cheap is always relative. On NPR this morning, I heard a story in which a home in a decent neighborhood in California couldn’t sell even at $5000, which is pretty “cheap” to most people. Just not cheap for that market and for the work the house needed.

    Just a quick question: Doesn’t the 2X fundie community analyst overestimate cut both ways? In other words, haven’t they always made that overestimation? If so, then I would think that point would be neutral and not cut against the Bloomberg discussion?

  13. streeteye says:

    You might be selling Helicopter Ben short a little… He did QE1 in the crisis, QE2 when recovery faltered last time, forced the curve out to 2 years down to 0 over the dissent of the Austerians…hard to bet against him coming through again if there’s solid evidence of a downturn, which seems somewhat conjectural so far. Especially since he is all too aware that with debt levels where they are, sustained deflation would be catastrophic. (Japan is big savers, US is big borrowers, makes a big difference)

  14. Nuggz says:

    “I may have watched Nouriel Roubini, Peter Schiff, and John Maudlin too many times and interpreted them as “consensus”.”

    +100

  15. Maj Tom says:

    What I sent to Bloomberg regarding an apparent mixed use of Cyclically adjusted PE (16.4), operating earnings, and actual earnings:

    P/E Ratio on the S&P 500 is my forte. The paragraph with $2.3 Trillion Drop is misleading by making incorrect comparisons. The $109.12 in the next twelve months cited in article conflicts with S&P’s analysis of $94.88 (8-23-11 data from http://www.standardandpoors.com ) through 9/30/12, unless you are mixing “operating” vs “actual.” If your references cited “operating earnings,” then one can not use the long term average of 16.4 (50 years) for trailing earnings (as that is only available in “actual” numbers. The other popular 16.4 number is predicated on Shiller’s CAPE (which is also a misapplication of comparisons). Currently, S&P shows 109.06 for forward operating earnings, which closely mirrors your earnings estimates. The mixing of operating and actual earnings should be avoided as the differences in comparisons are staggering post 1995.

    Here is a picture showing the earnings out into 2012 and resultant S&P price predicated on 1) fair value based on long term history (bottom red line), and 2) what S&P would trade at if forward earnings were applied (top blue line). I will be updating this after 1 September with current information (but it is very close to Aug data).

    http://advisorperspectives.com/dshort/guest/Forecasting-the-Market-Chris-Turner.php >

    http://advisorperspectives.com/dshort/guest/Forecasting-the-Market-Chris-Turner.php

    Additionally, feel free to review the following graphs and charts wherein I list all the comparisons on 5, 10, 15, 20, and 30 yr periods for nominal, CPI Adjusted, and year over year earnings growth.

    http://www.businessinsider.com/q2-11-earnings-revised-lower-still-no-10000-for-2012-2011-8

    Enjoyed the article – hope this background information helps.

  16. Clem Stone says:

    I’m wondering how much of the market drop during recessions occurs before vs after the recession is universally recognized. It seems to me that there was a very sudden and widespread change in perception within the past month….many many people believe a recession is coming soon or already here. I don’t recall perceptions turning that rapidly in previous recessions but I could be wrong. Obviously the belief is not universal yet, but I’m betting that it will be soon enough. The main question in my mind is how far this bounce goes.

  17. Long term says:

    We may be on a deflationary spiral AND the market is cheap at the same time. SP500 companies are well-positioned to capitalize on foreign markets, which will continue to grow for decades (thereby lifting stock values). At the same time, American prices will probably continue to come down because of the dearth of jobs and our used-up credit. Although this hurts now, the deflation will position America to be more competitive for jobs and make a “comeback” in a decade or so.

  18. rootless says:

    P/E based on forward estimated operating earnings was about 15 to 16 in June 2009. So, if one used P/E based on forward operating earnings as a metric to evaluate the “cheapness” of the stock market, then one would have to conclude that stocks were much more expensive in June 2009 than they are today. This would be an absurd conclusion, wouldn’t it? It only shows that P/E based on forward estimated operating earnings is useless as a metric to evaluate whether stocks are cheap or expensive. Perhaps, one should do some statistical analysis whether this P/E has some predictive value from a contrarian point of view. Maybe someone has done this already. I don’t know.

  19. rootless says:

    I can’t really see what is has to do with “classical training”, if one uses wrong, misleading comparisons like comparing the P/E based on forward estimated operating earnings to a historical average of the P/E that is derived from reported earnings based on GAAP. I rather would suspect deliberate deception in this case.

  20. machinehead says:

    adbutler007 says:

    We only have forward PE ratio data back to 1990, which doesn’t give us much comparative history.

    Right — in today’s earlier post titled ‘Deploying Corporate Cash,’ a chart of forward earnings multiples since 1992 is presented, showing an average multiple of 16.4 times.

    Coincidentally, that same number is cited in the Bloomberg story:

    For the P/E ratio to reach its five-decade average of 16.4 without shares appreciating, earnings would have to fall …

    Obviously, a five-decade average of forward multiples doesn’t exist, since the series only began in 1990. Thus the Bloomberg author appears to be equating a five-decade average of trailing earnings multiples to a forward earnings multiple — which is flat-ass wrong.

    I just sent an email to the journo, challenging him on this basic error. Boomberg ain’t gonna soft-soap me with their Wall Street shill crapola …

  21. Gaucho says:

    Hi Barry. do you have by any chance a chart of the Nikkei P/E going back 25 years? best

  22. ga082003 says:

    What bloomberg may be assuming is that in case there is QE3, there will be massive cash piling on corporate books which will make 10x really cheap

    Some charts on Gold
    http://capital3x.com/?p=462

  23. Joe Retail says:

    I’m now seeing companies that I believe are solid, offering dividends that I believe are well protected, giving yields in the 4% to 6% range. That’s a measure that I find interesting – at least it offers decent income while we wait for the other silliness to sort itself out.

  24. slowkarma says:

    I don’t think anybody can tell what’s going to happen purely through the kinds of analysis we’re seeing in these comments; there are just too many black swans in the air. But I do know that there are a very large number of professional politicians with their fingers on various economic buttons who will be running for reelection next year, and that seems to me to suggest that a real recession is unlikely. These people, Dems and Reps alike, will be desperate not to have things crumbling just as the campaigns get going. I think we might therefore see some inflation in the market in the next year — not inflation-inflation, but hot-air inflation, in which valuations are driven up because they can be, and because it’s in the interest of a lot of powerful people to get that done. After that, the deluge.

  25. Ted Kavadas says:

    RE: “In other words, a falling P/E could be evidence of an ongoing deflationary phase, and not proof that markets are cheap.”

    I like to use the term “deflationary pressures” to characterize certain aspects of our current economic environment. I recently wrote a post on the importance of the current Gold correction with regard to assessing deflationary pressures; here is the post for those interested:

    http://economicgreenfield.blogspot.com/2011/08/gold-and-deflationary-pressures.html

  26. Rouleur says:

    …from Dr John’s Weekly Market Commentary -

    “It is now urgent for investors to recognize that the set of economic evidence we observe reflects a unique signature of recessions comprising deterioration in financial and economic measures that is always and only observed during or immediately prior to U.S. recessions. These include a widening of credit spreads on corporate debt versus 6 months prior, the S&P 500 below its level of 6 months prior, the Treasury yield curve flatter than 2.5% (10-year minus 3-month), year-over-year GDP growth below 2%, ISM Purchasing Managers Index below 54, year-over-year growth in total nonfarm payrolls below 1%, as well as important corroborating indicators such as plunging consumer confidence. There are certainly a great number of opinions about the prospect of recession, but the evidence we observe at present has 100% sensitivity (these conditions have always been observed during or just prior to each U.S. recession) and 100% specificity (the only time we observe the full set of these conditions is during or just prior to U.S. recessions). This doesn’t mean that the U.S. economy cannot possibly avoid a recession, but to expect that outcome relies on the hope that “this time is different.”

    …btw, this week’s commentary is on of his best, IMHO -

    http://www.hussman.net/wmc/wmc110829.htm

  27. ga082003 says:

    This is funny. JohN pAULSON IS DOWN 40% ON HIS ADVANTAGE FUND
    http://capital3x.com/?p=529

    How could seemingly smart people with 2bn capital become dumb with 30bn capital?

  28. rootless says:

    @JoeRetail:

    What dividends would these companies have delivered historically on average, before the last 15 years of excessive prices in the stock market? Have you taken this into consideration? S&P500 is still overpriced by about 20% compared to the historically averaged P/E based on cyclical and inflation adjusted earnings. And previous secular bear markets ended when CAPE had reached single digits. Any income from a dividend of 4 to 6% would be erased by an annually averaged decrease in the stock price of 4 to 6%, in case you are selling the shares of the company again at a later point in time.

  29. pc says:

    A recent publication by the Federal Reserve Bank of San Francisco looking at baby boomers retiring and the effect it’ll have on equity markets “…P/E should decline persistently from about 15 in 2010 to about 8.4 in 2025, before recovering to 9.14 in 2030…”

    http://www.frbsf.org/publications/economics/letter/2011/el2011-26.html

  30. Joe Retail says:

    @rootless

    Very good points – which is why I’m not jumping in with both feet – more like a toe in the water. It’s a tradeoff between earning 0% on T-bills vs taking the dividend along with the risk that prices won’t come back by the time I need to sell.

    BTW my reference point is the Canadian market; perhaps of lesser interest to readers of this blog, but it’s what I understand so it’s where I play.

  31. VennData says:

    Always ask yourself if the underground economy is growing, or shrinking. This is hard to measure, you start with energy use. This is information that is not priced into the market Everything else from Bloomberg to Hussman’s ratios are known, therefore in the market

    Are you more or less willing to engage in the underground economy? Is energy/gas price ‘too high?’ Are the bars crowded? Your dealer cool?

  32. bonzo says:

    Earnings of 109 are way above trend-line as % of GDP and clearly unsustainable. They WILL fall and fall a lot. A fall to the 72 mentioned in the article is most definitely possible, since that is about the trend-line. In other words, the SP500 is closely to fairly priced right now, based on historical averages. And remember, history was kind to the United States in the 20th century. Big winner in both WWI and WWII, lots of cheap oil to exploit, no major problems. Things could be worse in the 21st century.

  33. VennData says:

    How can corporate profits grow faster than ‘the economy?’

    It’s the underground economy, stupid.

  34. constantnormal says:

    And this does not even consider the bogus accounting that is endemic to the financial industry … courtesy of the ruination of FASB 157 … and likely a thousand other smaller insults, benefiting particular companies … what would happen to the earnings of the banksters, which comprise an outsize fraction of the S&P 500, if they were forced to acknowledge even a portion of the junk that they hold as the junk that it is? The write-downs would wipe them, and their earnings, completely out of existence …

  35. Livermore Shimervore says:

    What’s bigger? Global revenue growth for the S&P or the other shoe on a RE drop? Seems to me that its much like shorting vs buying. One you can more less ballpark to the down while the other can go much higher than you ever anticipated. You have to make a call, worst case, on RE and another call, best case, global growth. The thing that sticks in my mind is that despite the fact that RE is not back to its 100 year average after a massive drop there’s been no slowdown in investing for growth. I’m of the opine that those who who hold the investment purse strings are not going to wait for the FUBAR’d RE to come back.
    Asia needs its iron ore, Chile has no debt, Brazil has oil, Canada still has their in the sand and capitalism isn’t going to die any time soon.

  36. Livermore Shimervore says:

    by the way, I’m sure the mutual fund guys make their calls based on earnings but how much upside are you leaving on the table if you strategy is heavily weighted towards value instead of growth when there’s a fundamental reshaphing of the consumer occurring around the globe.

  37. crunched says:

    And yes, Bloomberg has become cheerleaders of late – mainly the online/print stuff, not so much TV.

    Here is an accurate PE for market:

    http://www.multpl.com/

  38. Market Panic says:

    Re: “I was somewhat surprised by a Bloomberg article discussing how cheap the S&P”

    Surprised?!?

    We have a presidential election next year.

    When I watched FoxBusiness (managed by conservatives) over the weekend, they bashed the stock market and the economy — all weekend constant artillery of thick heavy bashing.

    When I watched Bloomberg TV (managed by progressives), they were more “fair and balanced” but with an obvious cheerleading spin.

    BTW, the same networks played opposite roles (basher vs. cheerleader) when Bush was the president.

  39. 4whatitsworth says:

    Hmm deflation.. I don’t see tight monetary policy (an under supply of money) or much of an over supply of goods rents are even going up.

    The thing I have my eye on is international demand 40% of our business is international if that goes to 15% or 20% and there is no uptick in US demand then clearly the fat lady is on stage next.

  40. Livermore Shimervore says:

    “Market Panic Says:

    Re: “I was somewhat surprised by a Bloomberg article discussing how cheap the S&P”

    Surprised?!?

    We have a presidential election next year.

    When I watched FoxBusiness (managed by conservatives) over the weekend, they bashed the stock market and the economy — all weekend constant artillery of thick heavy bashing.”

    Please do not confuse conservatives with neo con right wingers. There are very few actual conservatives at Fox Business or any other “news” media channels for that matter.

    Gallup makes this same mistake in their polling. They lump conservatives in with right wingers who have no issue with activists on the high court, expansion of executive powers, taking FEMA money during hurricanes, nation-building foreign policies in Iraq, continuation of corporate welfare and other wholly unecessary subsidies, the religious right poking their noses in your bedroom, etc.

    Gallup, and all other pollsters SHOULD be dividing their respondents not into three groups (liberal, moderate, conservative) but at least four: liberal, moderate, conservative and right wing.
    Fiscal liberals like Sarah Palin and Rick Perry go around calling themselves ‘conservatives’ while taking federal money at every turn and expanding govt just enough to be considered a net job creator.

  41. David in D says:

    Would someone please explain to me (and I’m serious about this would love a post below on this) how we could end up in a ‘deflationary spiral?’ Given that interest rates are so low and the possibility of further QE I don’t get it. Help please?

  42. Rouleur says:

    David in D -

    …if existing “debt” collapses at a greater rate than new “money” is being created…that would result in a deflationary spiral…

  43. philipat says:

    Inflation or deflation. IMHO the Bond markets normally get it right, not the “Stupid little brother” of bond markets, aka the Equity markets. There is either going to be a second debt crisis OR a very long period of slow recapitalisation which requires low rates. This is also know as “The Japanese model” Good luck but I still prefer Swedish meatballs which get digested more quickly.

  44. Rouleur says:

    …i’m with you philipat, but, that does not, yet, appear to be the agenda…

  45. wally says:

    If you missed the last week, you missed some nice returns. There really isn’t any more ‘story’ than that; it isn’t about right or wrong or what should be or what always happened before.

  46. PDS says:

    I agree with your conclusion….but if that’s your thesis than the headline should read….”Is the S&P Expensive?” ….which it is and has all year….

  47. seneca says:

    Bloomberg tells us the stock market is as cheap as 1982. Yet in 1982 the S&P500′s dividend yield was over 6% at one point and consistently over 5%. Today the S&P500 yields only a little more than 2%.

  48. David in D says:

    Thanks Rouleur.

  49. philipat says:

    And then there was CNBC’s Michelle Caruse-Carrera opining that BAC is strong because of the size of its deposits. Shouldn’t CNBC provide some basic financial education to its presenters. They don’t appear to know their liabilities from their asses. Sorry, I meant assets.

  50. Rouleur says:

    …cool DinD…

    …wally – enjoy your short term thrills…all the best…Mr MoMo…smiley face inserted here…

    …@seneca…huh???, as cheap as then…?…must be those lustful forward earnings…

  51. [...] Ritholtz Of course, left unsaid is what if analysts estimates are too high; Historically, the fundie community has overestimated earnings growth by a factor of 2X. [...]

  52. wally says:

    “wally – enjoy your short term thrills”

    They’re all short term. The amusement is watching people try to layer their ‘rationale’ over events. Whether the market is up or down, high or low, there is always somebody who says it should not be.

  53. number2son says:

    How could seemingly smart people with 2bn capital become dumb with 30bn capital?

    Um … maybe because in this instance that smart person does not have illegally obtained inside information?

  54. royrogers says:

    “# philipat Says:
    August 29th, 2011 at 9:13 pm

    And then there was CNBC’s Michelle Caruse-Carrera opining that BAC is strong because of the size of its deposits. Shouldn’t CNBC provide some basic financial education to its presenters. They don’t appear to know their liabilities from their asses. Sorry, I meant assets.”

    Michelle does have transparent, tangible assets.

  55. AAAMPblog says:

    Valuation in determined by earnings, and as you point out earnings are at great risk now. The market is usually 6-12 months ahead of reality and may indeed be signalling a deflationary plunge. The best way to avoid a deflationary crash is to unleash the economy. I have written an article titled “This is the Reason We Don’t Have Economic Growth and Job Creation” for anyone interested at:
    http://blog.arborinvestmentplanner.com/2011/08/this-is-the-reason-we-dont-have-economic-growth-and-job-creation

  56. Marc P says:

    I’m no analyst so I am not qualified to give estimates for PE multiples and earnings. However, note that the 1210 current level of the S&P 500 is the same as it was in December 2005. Given the health of the United States economy and that of our major trading partners, are you more optimistic today than you were in December 2005? Yeah, I didn’t think so.

    A month ago the S&P 500 was at about 1350 which matches the index in autumn 2006 and the beginning of 2008. If you had surveyed smart entrepreneurs and business executives do you think they would have given more bullish responses in those periods or the current one?

    Something’s amiss, and it smells like its coming from the analysts.

  57. Marc P says:

    It’s curious, isn’t it? Note that the 1210 current level of the S&P 500 is the same as it was in December 2005. Given the health of the United States economy and that of our major trading partners, are you more optimistic today than you were in December 2005? I didn’t think so.

    A month ago the S&P 500 was at about 1350 which matches the index in autumn 2006 and the beginning of 2008. If we had surveyed smart entrepreneurs and business executives do you think they would have given more bullish responses in those periods or the current one?

    Something’s amiss, and it smells like its coming from the analysts.

  58. philipat says:

    @royrogers

    “Michelle does have transparent, tangible assets.”

    Two of them? Yes, she can be forgiven for a lot!!

  59. [...] Who says equity market valuations have to rise?  (Big Picture) [...]

  60. [...] Is the S&P500 Cheap? (August 29th, 2011) [...]