Wondering what the many bears of the boards think about the S&P 500 being priced at 13 times backwards earnings, historically a very low figure for stock prices. Seems like an awful lot of bearishness is already factored into the market currently.

Well, if you take out big cap tech and pharma, I'm sure the current 13.86x is more like 17-18x,

The historical averages include big cap tech and pharma.

"Call Me Maybe" is really a deep meditation on the nature and ironies of the euro crisis.

Wondering what the many bears of the boards think about the S&P 500 being priced at 13 times backwards earnings, historically a very low figure for stock prices. Seems like an awful lot of bearishness is already factored into the market currently.

As I said, I don't think the overall market is particularly cheap here. And, I do agree with the GLG guy in the article above - I think we're in a long-term secular deleveraging trend that, generally speaking, will deflate asset prices.

That said, there's a ton of stocks that are down 40, 50 even 60+% from recent highs and even more than that from their all-time highs. Just off the top of my head, this would include steel and coal stocks (e.g., X, ACI, BTU), independent E&P oil/gas stocks (esp. small & mid-cap names, e.g., SFY, FST), mining stocks (again, esp. small and mid-cap names, e.g., HBM, TC), certain tech/consumer names that have fallen behind (e.g., SNE, RIMM, NOK), certain retail names (e.g., JCP, ANF), many financial stocks (e.g., MS, GS, C), many materials/industrial stocks (e.g., GTI, GSM, CMI), many smaller defense/government contract-dependent stocks (e.g., KTOS, SAI), etc.

Don't get me wrong, I'm not advocating going out and buying these just because they're down (though, I do own a few of the above names), especially given how poor the economic outlook is. That said, I wonder if there might be some bargains among the wreckage that might do well (I'm talking about more than just a short-term pop) even despite the despite the gloomy macro back-drop. Thoughts?

Europe's largest hedge fund manager sees another 15-20 years of crisis, asset prices getting smashed, and equities being expensive relative to bonds:

Crisis has barely begun, says GLG hedge fund manager
Reuters 4:18am EDT
By Laurence Fletcher

MONACO (Reuters) - The global financial crisis has barely started and is likely to last for at least another 15 to 20 years as major economies cut debt levels, according to Jamil Baz, one of Europe's most prominent hedge fund managers.

Baz, chief investment strategist at GLG Partners, told the GAIM 2012 conference in Monaco that total debt levels in a number of major economies had actually risen since 2007 and had much further to fall before reaching "a semblance of equilibrium".

"This crisis has not even started. It will take an extremely long time to reach its peak velocity, and by a long time I mean at least 15-20 years," Baz, who co-manages GLG's Atlas Macro fund, told delegates on Tuesday.

"The economic impact of this crisis will be devastating," he added. "Risky assets will look very ugly as a result."

His comments come as indebted countries in Europe and elsewhere battle to cut spending and boost growth to try and reduce debt and convince investors to continue buying their bonds.

On Tuesday Spain was forced to pay a euro era record price to sell short-term debt on Tuesday.

Greece, meanwhile, has been brought back from the brink of default by Sunday's parliamentary election that has cleared the way for a renegotiation of the terms of its bailout package.

Baz said that total debt to GDP in G7 countries as well as Spain, Portugal, Ireland and Greece had risen over the past five years from 380 percent to 420 percent.

To get to debt to GDP levels below 200 percent, at a rate of deleveraging of 10 percent a year, there will be "at least 20 years of deleveraging, assuming countries can do it diligently year in, year out, at great risk to their political and social stability", he said.

Baz was at odds with the thinking of many fund managers by saying that equities look expensive compared with bonds.

He estimates that the implied equity risk premium - the extra return the stock market must provide over the return on government bonds to compensate for market risk - was likely to be less than 3 percent, below current consensus.

"This means, believe it or not, that equities are still expensive (relative) to bonds."

However, he said that corporate debt was being priced far more cheaply in bond markets than in equity markets.

"This is as close as you can come to macro arbitrage," he said. "Corporate debt is by far cheaper than equities."

Agree -- with both of your above posts. I think an overall deleveraging will have to occur, and I think as a result, stock picking will become more important.