Right now is a pretty confusing time for investors. Mostly because the usually noisy market is even more boisterous, with smart people from every corner of the market doling out their thoughts on current stock market levels.

Seth Klarman thinks we are dangerously overpriced, as does fellow hedge fund manager David Tepper. But mutual fund manager Bill Miller thinks that the market is awash with opportunity right now and Leon Cooperman thinks we have some upside left for 2014 as well.

These are all intelligent financial minds with solid track records for the most part … and yet they have wildly different opinions on current stock market conditions.

I listen to what these folks have to say, but in truth, there’s only one measure of market conditions that I truly heed at any given moment of time:

“Are there safe and cheap stocks right now?”

It’s the only question that matters.

Safe, Cheap Stocks Are Few and Far Between

If there are enough safe and cheap stocks out in the market that I can invest in (with average position sizes of 1% to 2%), then I will be fully invested. If there aren’t, my cash holdings will rise.

And right now, there aren’t a lot of cheap stocks around.

If we look at just the S&P 500, only 25 stocks (5%) trade below book value. Only 12 of those trade below their tangible book value.

Compare that to the bargain-hunting nirvana of year-end 2008, when 100 stocks (20%) in the index traded below book value. At the market bottom in March 2009, a whopping 126 companies in the index were trading below book value.

Clearly, at those points in time, there were more than enough opportunities for investors with large-cap preferences to buy safe, cheap stocks.

I ran a screen this morning using a 6,500-stock, domestic-stocks-only database. I found that just 562 (9%) of these U.S. stocks trade for less than their tangible book value. Most that do are small potatoes, with only 157 of these cheap stocks boasting market capitalizations north of $200 million; 237 are nano-caps that are smaller than $50 million.

Of course, price isn’t enough. For a deep value investor, a stock can’t just be cheap, but safe, before it’s worth buying.

And when I added criteria for debt and current ratio, the pool of attractive stocks shrunk dramatically.

I limited my search to those stocks with a debt to equity ratio of 0.4 or less and a current ratio of more than 2 to add a margin of balance-sheet safety. Only 152 (2.4%) of the 6,500 American stocks in the database made the grade here as cheap and potentially safe stocks. (Only 22 of them have market caps of $200 million or more.)

Meanwhile, 36 of the 152 potentially safe and cheap stocks pay a dividend, while 57 of them are profitable. Combine those requirements, and only 25 stocks meet them all.

In 2009, that list of stocks totaled more than 200 names.

Bottom Line

Let the talking heads talk, but the proof is in the numbers. For deep value investors in the manner of Graham and Schloss, there’s just not much to buy right now.

There is some valuable information in that statement, as the opportunity scenario looks a lot to me like 2007. Granted, you can’t time the market based on this info … but you can be a lot more cautious in your approach.