The Buffet indicator is the ratio of the total United States stock market to GDP. The current ratio of 230% is approximately 75.15% (or about 2.4 standard deviations) above the historical trend line, suggesting that the stock market is Strongly Overvalued relative to GDP.
Does this mean the common advice to invest in something like US 500 or VOOG on the long term and forget about it should be taken with a grain of salt? U.S. market long-term investors, are you worried about the Buffet indicator? What would you expect the overvaluation to lead to? How are you protecting your investments?
U.S. market long-term investors, are you worried about the Buffet indicator? What would you expect the overvaluation to lead to? How are you protecting your investments?
byu/Hopeful-Internal-919 ininvesting
Posted by Hopeful-Internal-919
1 Comment
Berkshire has a massive cash position and yields on treasuries are great. I think the question is are you good with 4% yield or do you risk a significant loss to make 5% more than treasuries this year. Personally, I’m good with cash.