Jon Ho
liked
Buffett Indicator is the percentage of the total market cap relative to the US GDP. According to Warren Buffett, such an indicator is probably the best single measure of where valuations stand at any given moment.
How does the Buffett Indicator work?
In 2001, Warren Buffett said 75% to 90% are reasonable; over 120% suggests the stock market is overvalued.
As of Aug 28 2021, the Total Market Index is at US$ 46.88 trillion, about 206% of the US GDP, signaling the market is heavily overvalued.
Did Buffett Indicator work well?
Let's see the historical chart of the Buffett Indicator. The ratio reached 140% in 2000, portending the dot-com bubble which eventually burst. The NASDAQ fell by 75% from March 2000 to October 2002.
The ratio also reached 155% in Feb 2020, followed by the pandemic crash that caused the S&P500 Index to drop from 3393 to 2192, a 35% correction. However, stock market quickly bounced, doubling from the dip.
And when the ratio breaks 200%, we are witnessing history undoubtedly.
Will this time be different?
With interest rates at historic lows, there is a voice in the market that "this time is different".
Cathie Wood said: GDP statistics evolved during the Industrial Age and do not seem to be keeping up with the digital age. Thanks to productivity, real GDP growth probably is higher and inflation lower than reported, suggesting that the quality of earnings has increased significantly.
Overall, if the stock market is a game, you have to stay in the game before you beat the game. The Buffett Indicator can be a tool to relocate where we are in the stock market. It's never too late to do our due diligence and control the risk to gain a long-term return.
Do you think the Buffett Indicator is useful? Should we pay close attention or just ignore it? What should we do in response to such an indicator?
Rewards:
Click "Enter Now" to post before Sep 3, and based on the quality and originality,
5 mooers will win 2,000 points
10 mooers will win 1,000 points
Don't forget to click "Enter Now" to win!
How does the Buffett Indicator work?
In 2001, Warren Buffett said 75% to 90% are reasonable; over 120% suggests the stock market is overvalued.
As of Aug 28 2021, the Total Market Index is at US$ 46.88 trillion, about 206% of the US GDP, signaling the market is heavily overvalued.
Did Buffett Indicator work well?
Let's see the historical chart of the Buffett Indicator. The ratio reached 140% in 2000, portending the dot-com bubble which eventually burst. The NASDAQ fell by 75% from March 2000 to October 2002.
The ratio also reached 155% in Feb 2020, followed by the pandemic crash that caused the S&P500 Index to drop from 3393 to 2192, a 35% correction. However, stock market quickly bounced, doubling from the dip.
And when the ratio breaks 200%, we are witnessing history undoubtedly.
Will this time be different?
With interest rates at historic lows, there is a voice in the market that "this time is different".
Cathie Wood said: GDP statistics evolved during the Industrial Age and do not seem to be keeping up with the digital age. Thanks to productivity, real GDP growth probably is higher and inflation lower than reported, suggesting that the quality of earnings has increased significantly.
Overall, if the stock market is a game, you have to stay in the game before you beat the game. The Buffett Indicator can be a tool to relocate where we are in the stock market. It's never too late to do our due diligence and control the risk to gain a long-term return.
Do you think the Buffett Indicator is useful? Should we pay close attention or just ignore it? What should we do in response to such an indicator?
Rewards:
Click "Enter Now" to post before Sep 3, and based on the quality and originality,
5 mooers will win 2,000 points
10 mooers will win 1,000 points
Don't forget to click "Enter Now" to win!
49
12
Jon Ho
liked
Jon Ho
liked
As we know, candlestick charts influence the emotions of traders a lot. But what is the candlestick chart?
Candlestick Charts
Compared to traditional OHLC bar charts, many traders consider candlestick charts more visually appealing and easier to interpret. Each candlestick provides an easy-to-decipher picture of price action. An analyst can quickly understand the relationship between the opening and closing price as well as the high and low pric...
Candlestick Charts
Compared to traditional OHLC bar charts, many traders consider candlestick charts more visually appealing and easier to interpret. Each candlestick provides an easy-to-decipher picture of price action. An analyst can quickly understand the relationship between the opening and closing price as well as the high and low pric...
![What is Candlestick Chart and how to understand it?](https://ussnsimg.moomoo.com/8881870611707077210.jpg/thumb)
![What is Candlestick Chart and how to understand it?](https://ussnsimg.moomoo.com/5871816160595434846.png/thumb)
![What is Candlestick Chart and how to understand it?](https://ussnsimg.moomoo.com/5686173002492987163.png/thumb)
+4
152
24
Jon Ho
liked
The best time to buy Asia stocks could be now, a JPMorgan strategist said Wednesday.
Mixo Das, Asia equity strategist at the bank, said U.S. markets have been hitting record levels while Europe and Japan are approaching their all-time highs. However, Asian markets have not seen the same trend.
"Ever since the highs in February we're down quite a bit in Asian equities and the way we look at it is, our framework is telling us that now is probably the best time to be taking risks in Asia." Das said investor positioning in Asia is currently "extremely, extremely light" while valuations have come down to more normal levels. If macroeconomic momentum in the region starts to stabilize, Asia s...
Mixo Das, Asia equity strategist at the bank, said U.S. markets have been hitting record levels while Europe and Japan are approaching their all-time highs. However, Asian markets have not seen the same trend.
"Ever since the highs in February we're down quite a bit in Asian equities and the way we look at it is, our framework is telling us that now is probably the best time to be taking risks in Asia." Das said investor positioning in Asia is currently "extremely, extremely light" while valuations have come down to more normal levels. If macroeconomic momentum in the region starts to stabilize, Asia s...
![JPMorgan strategist says now could be the best time to buy Asia stocks](https://ussnsimg.moomoo.com/5683018006495616026.jpg/thumb)
32
6