A new bubble on Wall Street?

in buffett •  8 years ago 

Is there a new bubble on Wall Street?
Maybe... To answer this question we suggest an orginal indicator, the name is "Buffett Indicator".

In 2001 Warren Buffett remarked in a Fortune Magazine interview that "This indicator is probably the best single measure of where valuations stand at any given moment". This indicator is only for the long-long term...

It's very simple to calculate this indicator:
THE BUFFETT INDICATOR = MARKET CAP / QUATERLY GDP

We use the Wilshire 5000 Index to estimate the market cap.
Look at the following chart (S&P 500 and the Buffett indicator):

This indicator (blu line) suggests that today's market remains overbought and still above the housing-bubble peak in 2007.
...A new bubble is ready?... What do you think?...

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  ·  8 years ago Reveal Comment