Buffett indicator — an indicator
Buffett indicator is probably still useful to indicate overall irrational exuberance in the stock market, such as the emergence of SPAC and high valuation for companies still burning money (albeit some narrowing the losses each quarter).
But Buffett stays invested all the time. in other words, we are back to individual stock valuation, looking at PE, EPS growth, equity growth, sales growth etc. Buffett indicator at 200% is certainly not an indicator to sell but to be cautious and review your stock holding.
One cannot deny Cathie Wood’s rationale that technology has changed the world and valuation method need to change but personally i think it is about how to value the future growth. it is still about valuation of each company but just more difficult given the impact of different technology.
Last but not least Buffett indicator at 150 during year 2000 did lead to huge Nasdaq correction but the impact seem more limited compared to the indicator around 120 during year 2007 which leads to global financial crisis. Hence Buffett indicator is just another indicator— there is many pockets of irrational exuberance but there are still good value in the stock market, stay invested!
But Buffett stays invested all the time. in other words, we are back to individual stock valuation, looking at PE, EPS growth, equity growth, sales growth etc. Buffett indicator at 200% is certainly not an indicator to sell but to be cautious and review your stock holding.
One cannot deny Cathie Wood’s rationale that technology has changed the world and valuation method need to change but personally i think it is about how to value the future growth. it is still about valuation of each company but just more difficult given the impact of different technology.
Last but not least Buffett indicator at 150 during year 2000 did lead to huge Nasdaq correction but the impact seem more limited compared to the indicator around 120 during year 2007 which leads to global financial crisis. Hence Buffett indicator is just another indicator— there is many pockets of irrational exuberance but there are still good value in the stock market, stay invested!
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The REALChrisWeaver : I didn't need a re read. but thanks. yawn