112 days ago • Posted by Charles-Henry Monchau

Chart of the day: Warren Buffett's favorite market indicator nears record high, signaling stocks are overvalued and riskier than ever

Warren Buffett's preferred market gauge is nearing a new high, indicating stocks are overvalued and could tumble in the coming months. The "Buffett indicator" takes the total market capitalization of a country's stocks and divides it by quarterly GDP, in order to compare the stock market's valuation to the size of the economy. The current reading is at 168%, which is close to all-time highs. The chart below is the St Louis Fed's version of the Buffett indicator (both market cap and GDP are indexed to the fourth quarter of 2007) - source: Markets Insider 

#Stocks
This chart is the St Louis Fed's version of the Buffett indicator (both market cap and GDP are indexed to the fourth quarter of 2007)
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