Investors who are buying stocks because they think bonds are too expensive are setting themselves up for potentially disastrous losses, says Albert Edwards, global strategist at Société Générale.

The “TINA” argument, or “there is no alternative” to stocks, ignores long-term market trends that show bear markets don’t end until the economy has been through at least four recessions, he says. Because the U.S. has only had two recessions since the prior market peak in 2000, stocks are vulnerable to the next economic contraction.

“The equity secular valuation bear market takes many economic cycles to unfold and ends when equities are dirt cheap,” Edwards says in a Sept. 7 note obtained by Newsmax Finance.

The last time U.S. stocks bottomed out, the global economy was in the midst of the deepest decline since the Great Depression. The S&P 500 fell about 60 percent from its October 2007 record high to a level of 666 in March 2009.

But even that decline didn’t mean stocks were dirt cheap, Edwards says, pointing to the Shiller price-to-earnings ratio, which uses the average inflation-adjusted earnings from the previous 10 years to help measure a stock's relative value.

“U.S. equities did not get dirt cheap in March 2009 at a Shiller P/E of 14 times. They just got cheap,” he says. “To be dirt cheap, they needed to half again from the 666 level they reached. But why should we have expected this process to end in 2009 as it was only the second recession from the valuation peak of 2000?”

The Shiller PE ratio for the S&P 500 is currently 27 times, meaning stocks are expensive compared with the long-term average of about 16 times.

Edwards has been on the record with bearish calls since introducing his “Ice Age” thesis in 1996. The forecast advised investors to put money into bonds and be cautious with stocks as deflationary pressures like those seen in Japan spread throughout the world.

Japan has struggled with repeated recessions and slim growth since its economic bubble collapsed in the 1990s.

Edwards last year said he expected the S&P 500 to fall 75 percent from its May 2015 high of 2,132.80. Instead, the index pushed 2.8 percent higher to a new record of 2,193.81 on August 15 as central banks like the Federal Reserve expanded the money supply to stimulate economic growth.

“Most investors are currently neglecting the longer-term context of this secular bear market,” he says. “Relying on TINA will prove disastrous.”

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