Stocks Cheapest since '89

This is yet another reason to be bearish even on the short term: the consensus that stocks are not only cheap, but the cheapest since '89 is just another rush of irrational exuberance.

As you know if you have been following my blog, stocks have been the most overvalued since the creation of the S&P 500 (in 1936) and probably even more overvalued than any time in history.

Sept. 8 (Bloomberg) -- Never before have Wall Street stock analysts diverged more with economists at their own firms over the outlook for earnings in the Standard & Poor’s 500 Index.
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Concern that profits won’t measure up to estimates may limit returns after the S&P 500 rose 50 percent since March, the steepest rally in seven decades. While shares trade close to the cheapest levels relative to earnings since 1989, based on next year’s projections, forecasts for the economy by Goldman Sachs Group Inc.’s Jan Hatzius, Morgan Stanley’s Richard Berner and Bank of America Corp.’s Drew Matus show equities are no bargain.