Goldman Misses The Point: Equities Aren't Cheap Bonds Are Insanely Expensive

Goldman portfolio strategists Peter Oppenheimer and Matthieu Walterspiler are out with a report getting big of attention.  The report presents the generationally important bullish case for stocks relative to bonds. 

I'm worried this report will be the case for everyone to go 100% into equities and then get clobbered when the bond bubble bursts.  I agree that equities are stupidly undervalued relative to government bonds but it's only because EVERYTHING is at an historic low valuation relative to government bonds.  Central banks have made government bonds the most expensive investment asset in the world.  I used to think race horses and my friends' independent film projects were the most expensive investments in the world because they guaranteed me a large and negative inflation adjusted return.  But now I can get the same from governemnt bonds.  Central banks have driven the prices of government bonds to the moon.  So yes, equities are at an historically low valuation relative to them but I could say the same of housing, real estate, used cars, sand, old running shoes, art and rusty gardening equipment. 

Disclosure:  I own government bonds but they are mostly of the inflation indexed variety.  I also own equities, housing, investment real estate, used cars, sand, old running shoes, art and rusty gardening equipment. 

Hat Tip:  Joe Weisenthal, Business Insider