If Stocks Are So Cheap, Why Won’t Investors Buy Them?

Some mischievous equity market data points in a Bloomberg article today. The piece implies that investor should buy stocks, because …

  • Exxon Mobil earned more in 2007 than any public company in history
  • Eli Lilly’s yearly profit is up more than at any time in almost a decade
  • Corning’s margins are the highest in 20 years
  • S&P 500 companies trade at 13.7x 2008 earnings, the lowest multiple since October 1990

That sounds awfully upbeat, does it not? Record sales, high margins, big profit growth, and low market multiples: If that’s not going to goad investors into buying stocks, what will?

Could it be that some investors think, rightly or wrongly, that those numbers aren’t going to stay where they are current are? Gee, I wonder.


  1. Motts McGregor says:

    Jeremy Grantham’s voice is ringing in my head…. “If profit margins aren’t mean-reverting, capitalism is broken.”

  2. Investors look ahead, not back.