r/investing
Warren Buffett's Market Indicator Tops 232.1% as US Stocks Trade at Extreme Valuations: Why It Matters
The Buffett Indicator hits a record 232.1%, signaling extreme US stock valuations and historically preceding market downturns.
- The Buffett Indicator has reached an all-time high of 232.1%, indicating extreme market valuations.
- Historically, similar peaks in the late 1960s, 2000, and 2021 were precursors to severe market downturns and bear markets.
https://www.ibtimes.co.uk/buffett-stock-market-gauge-record-high-1802117
Warren Buffett's time-tested stock market gauge just surged to an all-time high of 232.1%, showing that US stock valuations have reached extreme levels.
Historically, such elevated Buffett indicator levels have been precursors to market downturns. In the late 1960s, Buffett's indicator approached similarly high levels, as it did in 2000 during the dot-com bubble, and again in late 2021. After the 2021 peak of 197%, the US stock market experienced a prolonged bear market. Similarly, when the indicator hit 190% during the dot-com bubble, the market subsequently declined sharply.
Anyone who bought at any time during the first fifty odd years of Buffetts tenure did ok, irrespective of WHEN in the cycle they bought.
I believe it will go down soon, but it’s a marathon not a sprint, so whatever.
It aligns with other indicators being at super high levels such as Schiller pe ratio and AIEA which both historically have been the best at predicting future equity returns. I’m just wandering if you think those are outdated too?
Sorry, what AIEA stands for?
Yes, PE Ratio says a bit more than Buffett's favorite indicator that nobody should use anymore. However, stock prices seem to grow with liquidity and considering liquidity inflation, the last years were not very good in terms of market performance.
A bit surprised that AIEA seems to be so high, as investments in money market and bonds are record high since last year with about a dozen trillion still waiting on the sidelines.
What is the AIEA?
Everything in its power to kick the can down the road\*
Your money may be worth 40% less today than a decade ago but hay LiNe gO uPpPP
Rich people do not own dollars. They own equities. Rich people do not care if dollars are worth 40% less today than a decade ago if their equities are worth 80% more. Only poor people own dollars, and they don't make the rules.
So like….95 out of 100 people care but because 5 assholes who live off the other 95s work we must INFLATE.
Makes sense ..it’s life.
If you're buying the S&P 500 your stock share price is based on the USD, so how this is this not a grossly oversimplified view of owning stock?
Isn’t this the same article posted weekly since covid… ?
Total us stock market / total USA GDP
+300% let's fucking gooooo
Nice FUD.
Buffet also said to buy when fear is high.
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