JPMorgan Reveals That Stocks Are More Expensive Now Than At Their 2007 Peak

JPMorgan Reveals That Stocks Are More Expensive Now Than At Their 2007 Peak

Tyler Durden on 01/03/2014 09:16 -0500
As we warned was likely to happen back in February of 2013 (given the typical trajectory of earnings expectations through a year), JP Morgan has confirmed that the S&P 500 is now more expensive on a forward P/E basis than it was at its peak in October 2007. So, despite the self-referential bias of each and every talking head asset-gatherer on mainstream media’s denial, stocks do not offer value here… no matter how many TINAs or BTFATHs you hear… At 15.4x NTM earnings, the S&P 500 is now 0.2x turns more expensive than at its peak in October 2007. Furthermore, on a Price-to-Book, Price-to-Cash-Flow, and Price-to-Sales basis, the S&P 500 is also well above its average valuation levels… Still think we can grow into more multiple expansion… then you better hope for an unprecedented rise in confidence… So, are stocks cheap?

How to Invest as Interest Rates Rise; Treasury yields are on the upswing. Here’s how to adjust your portfolio

How to Invest as Interest Rates Rise

Treasury yields are on the upswing. Here’s how to adjust your portfolio.

JOE LIGHT

Updated Jan. 3, 2014 11:51 p.m. ET

And so a new era begins. As interest rates rise, investors need to take a hard look at portfolios that were designed to hold up when yields were on the decline and safety was in high demand. It may be time to ditch beloved high-income sectors, such as utilities and telecommunications, in favor of those in which companies can increase earnings more quickly as the economy picks up steam. Commodities, which often suffer as interest rates rise, will be a tricky bet. Home values haven’t been as hurt by higher mortgage rates as you might expect. Read more of this post

Gold bulls lose faith in bullion’s allure; Last year’s losses battered the metal’s reputation as a store of value

January 3, 2014 8:58 am

Gold bulls lose faith in bullion’s allure

By Gregory Meyer

Last year’s losses battered the metal’s reputation as a store of value

Here’s an activity for the mean-spirited: read what analysts were saying about golda year ago. Nearly all believed the metal would rise in 2013, according to the London Bullion Market Association’s annual survey. Even the most conservative saw only tiny declines. “We remain gold bulls,” Joni Teves of UBS said in a view shared by many. Analysts issued an average price forecast of $1,753 per troy ounce. Read more of this post

Deere, 3M See $76 Billion Pension Burden Easing on Fed

Deere, 3M See $76 Billion Pension Burden Easing on Fed

3M Co. (MMM) and Deere & Co. (DE) are among U.S. employers seeing pension costs drop from a $76 billion peak, freeing up cash to spend or return to investors, as the Federal Reserve’s pullback on bond buying boosts interest rates. Read more of this post

Commodity-trading pioneer Peter Matthews has co-founded a new firm with a unique way to pare risk and maximize gains in ETF portfolios

SATURDAY, JANUARY 4, 2014

A Star Trader’s New Approach to ETF Diversification

By MIKE HOGAN  | MORE ARTICLES BY AUTHOR

Commodity-trading pioneer Peter Matthews has co-founded a new firm with a unique way to pare risk and maximize gains in ETF portfolios.

Sure, diversification is an important aspect of creating a successful long-term portfolio. But that doesn’t mean investors have to watch stoically as assets lose value at certain times, according to the founders of an interesting new Web-based money manager, PJMint. Read more of this post

Buyback Bonbons: After spending loads of cash to boost share prices through repurchases, U.S. companies now must focus on fostering growth. Trouble ahead for consumer-discretionary stocks?

SATURDAY, JANUARY 4, 2014

Buyback Bonbons

By KOPIN TAN | MORE ARTICLES BY AUTHOR

After spending loads of cash to boost share prices through repurchases, U.S. companies now must focus on fostering growth. Trouble ahead for consumer-discretionary stocks?

Confetti wasn’t the only thing to rain down from the skies as 2013 came to a close. Cash—gobs of it!—came fluttering right into our outstretched hands. Really, it did!

Of course, you had to be at the right place at the right time. And by that I mean you had to be a shareholder, preferably of large U.S. companies, which have been fervently buying back shares and practically shoveling cash back to their shareholders. In the fourth quarter, S&P 500 companies may have bought back nearly $138 billion worth of stock, says Howard Silverblatt, Standard & Poor’s senior analyst. If that estimate proves correct as companies file their quarterly disclosures, it’ll be the biggest quarter for buybacks since 2007 and a 40% jump from the level a year ago. Read more of this post

AQR’s Cliff Asness Blasts Those Who Call It “A Stock Picker’s Market”

Cliff Asness Blasts Those Who Call It “A Stock Picker’s Market”

Tyler Durden on 01/03/2014 21:45 -0500

Cliff Asness would politely request people stop saying “It’s a stock picker’s market.” While pairwise correlations have dropped to post-crisis lows, they remain elevated to ‘normal’ levels but, as Asness rages, perhaps asset managers who rely on this ‘weak’ phrase should more honestly note “I think they mean, “We will have to pick stocks now because the market isn’t making us money the easy way.” Read more of this post

A Different Dimension: Dimensional Fund Advisors eschews stock-picking completely, and yet manages to beat the market consistently

SATURDAY, JANUARY 4, 2014

A Different Dimension

By BEVERLY GOODMAN | MORE ARTICLES BY AUTHOR

Dimensional Fund Advisors eschews stock-picking completely, and yet manages to beat the market consistently.

It was 7:30 on a sunny October morning in Austin, Texas, and class was about to start. Most students were finishing their coffee and chatting about how they were looking forward to hearing professor Eugene Fama, the University of Chicago economist who a week earlier had won the Nobel Prize. The program, however, wasn’t your typical grad-school seminar. It was orchestrated by Dimensional Fund Advisors, the $332 billion mutual-fund firm whose investment strategy is based on Fama’s early and ongoing research; and the students were the financial advisors who sell its funds. Read more of this post

2014 outlook: Market melt-up; US stocks may be overpriced and profit margins at a high but even bears say the rally has room to run

January 2, 2014 6:01 pm

2014 outlook: Market melt-up

By John Authers

US stocks may be overpriced and profit margins at a high but even bears say the rally has room to run

American stocks look very expensive. Are they in a bubble? The S&P 500 has gained almost two-thirds since September 2011, a period in which its companies’ earnings have risen just 18 per cent. It is easy to see why many fear the bull market has gone too far. Read more of this post