Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Warren Buffet indicator
Old 12-16-2017, 11:06 PM   #1
Recycles dryer sheets
Backdraft57's Avatar
 
Join Date: Dec 2015
Posts: 96
Warren Buffet indicator

What do you think of this? Below from a website that follows Buffet and his GNP indicator.

"As of today, the Total Market Index is at $ 27720.8 billion, which is about 142.1% of the last reported GDP. This indicates that the market is Significantly Overvalued. The US stock market is positioned for an average annualized return of -1.9%, estimated from the historical valuations of the stock market. This includes the returns from the dividends, currently yielding at 1.8%."


Sent from my iPhone using Early Retirement Forum
__________________

Backdraft57 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 12-16-2017, 11:08 PM   #2
Recycles dryer sheets
Backdraft57's Avatar
 
Join Date: Dec 2015
Posts: 96
Sorry should have posted link
https://www.gurufocus.com/buffett_as...llocations.php


Sent from my iPhone using Early Retirement Forum
__________________

Backdraft57 is offline   Reply With Quote
Old 12-17-2017, 12:20 AM   #3
Recycles dryer sheets
FlaGator's Avatar
 
Join Date: Aug 2008
Location: The 850
Posts: 423
Has anyone seen analysis of Warren Buffett as a prognositicator? I have not, and would like to something, anything, that shows his predictive ability.

He's built quite a company, but that alone doesn't make me believe his predictions are more likely to be correct than anyone else's.
__________________
Stay at home slacker dad since 2015
FlaGator is offline   Reply With Quote
Old 12-17-2017, 02:03 AM   #4
Thinks s/he gets paid by the post
teejayevans's Avatar
 
Join Date: Sep 2006
Posts: 1,254
I beat the S&P by a lot in the 90s, since then, not so much, last 5 years he’s trailing it.
teejayevans is offline   Reply With Quote
Old 12-17-2017, 04:43 AM   #5
Thinks s/he gets paid by the post
DrRoy's Avatar
 
Join Date: Dec 2015
Location: Michigan
Posts: 2,281
Quote:
Has anyone seen analysis of Warren Buffett as a prognositicator? I have not, and would like to something, anything, that shows his predictive ability.

He's built quite a company, but that alone doesn't make me believe his predictions are more likely to be correct than anyone else's.
+1
__________________
"The mountains are calling, and I must go." John Muir
DrRoy is offline   Reply With Quote
Old 12-17-2017, 08:46 AM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 21,769
Quote:
Originally Posted by Backdraft57 View Post
... The US stock market is positioned for an average annualized return of -1.9%, estimated from the historical valuations of the stock market...
The above was the deduction of the Web page author. It did not come from Buffett.

Indeed if one reads the article, he will see that the article writer wrote at the end:

Warren Buffett is known for not caring what others do in the stock market. But from his asset allocations we can get some idea on where he is finding value among stocks, bonds and cash. Apparently he is bearish with bonds as the percentage of bonds is at the lowest level. As for stocks, he is relative bullish.


I own BRK class B shares, but never bother to read much about the company. The author pointed out that BRK has significantly cut back on bonds and stashing cash instead. The AA of BRK is currently as follows: 48.6% stock, 7% bond, 31% cash (not adding up to 100?).

In public, Warren, same as Bogle, never claims he knows what stock will do in the next year, or the year after next. However, same as Bogle he did offer a projection of stock price over the next decade or two, and it is going to be in the mid single digit based on their view of the US economy.

But regarding bonds, Warren does not mince words. Even as of a few years ago, he already called bonds "return-free risk". And the AA of Berkshire reflects his viewpoint. Will he be proven right? I will wait to see.
__________________
"Old age is the most unexpected of all things that can happen to a man" -- Leon Trotsky
NW-Bound is offline   Reply With Quote
Old 12-17-2017, 09:56 AM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 21,769
Quote:
Originally Posted by teejayevans View Post
I beat the S&P by a lot in the 90s, since then, not so much, last 5 years he’s trailing it.
Eh, do not make fun of Buffett yet.

Considering that he's only 50% in stocks, and shuns high-flying tech stocks at that, he's doing quite well. Does that not mean his stocks and other deals he did beat the S&P?

I only bought BRK shares after the Great Recession, so just now looked back to see how he fared. From the top in late 2007 to the bottom in March 2009, the S&P lost nearly 50%. BRK lost 30%, and that's because of the cash and bonds in its portfolio.
__________________
"Old age is the most unexpected of all things that can happen to a man" -- Leon Trotsky
NW-Bound is offline   Reply With Quote
Old 12-17-2017, 10:05 AM   #8
Thinks s/he gets paid by the post
 
Join Date: Sep 2006
Posts: 1,858
Quote:
Originally Posted by NW-Bound View Post
Eh, do not make fun of Buffett yet.

Considering that he's only 50% in stocks, and shuns high-flying tech stocks at that, he's doing quite well. Does that not mean his stocks and other deals he did beat the S&P?

I only bought BRK shares after the Great Recession, so just now looked back to see how he fared. From the top in late 2007 to the bottom in March 2009, the S&P lost nearly 50%. BRK lost 30%, and that's because of the cash and bonds in its portfolio.
IN Dec 2007 BRK was at $148,220 at March 2009 at $73,195 just over a 50% drop
Running_Man is offline   Reply With Quote
Old 12-17-2017, 11:00 AM   #9
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 21,769
You are correct. So, where did I err? I used Morningstar.

So, I went back and checked. It was because of the time frame used for comparison. The S&P and BRK peaked at different times. I just took a starting point in Oct 2017 because I remember the S&P hit a peak at that time.

I did it again, and noted the time interval carefully. The S&P peaked on 10/09/2007. A $10,000 invested on that date with Vanguard S&P VFINX became $4,555 on 3/06/2009. Do the same with BRK, and the $10K became $5,932, as BRK hit bottom on the same date in March 2009.

If counted from BRK's own peak to its own trough, the loss is higher as you noted.
__________________
"Old age is the most unexpected of all things that can happen to a man" -- Leon Trotsky
NW-Bound is offline   Reply With Quote
Old 12-17-2017, 11:10 AM   #10
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 19,683
So BRK dropped about as much as S&P, despite being ~ 30% cash/bonds?

That's a little scary.

-ERD50
ERD50 is offline   Reply With Quote
Old 12-17-2017, 11:42 AM   #11
Thinks s/he gets paid by the post
RobbieB's Avatar
 
Join Date: Mar 2016
Location: Central CA
Posts: 3,539
I would think that dropping 40% is not "about as much" as dropping 55%. And that 15% difference would be explained by the bonds and cash.
__________________
Retired at 59 in 2014. Should have done it sooner but I worried too much.
RobbieB is offline   Reply With Quote
Old 12-17-2017, 11:48 AM   #12
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 21,769
In 1997, BRK was about 77% in stocks as a chart in the OP article shows.

During the crash, American Express got hit hard like all financial companies. As BRK has a big stake in AXP that might hurt it some.
__________________
"Old age is the most unexpected of all things that can happen to a man" -- Leon Trotsky
NW-Bound is offline   Reply With Quote
Old 12-17-2017, 12:11 PM   #13
Recycles dryer sheets
 
Join Date: May 2013
Posts: 333
I don’t bet against the Fed or against Warren Buffet. Buffet’s prognosticating skills are shown in his results, not his predictions. In previous periods of over valuation he went on a stock buying strike, waiting for cheaper deals. I take this metric and many others pretty seriously. I believe euphoria can propel the market higher for a while, but stocks have always reverted to the mean.
__________________
F.I. in my 30's, OMYing well into my 40's!
RenoJay is offline   Reply With Quote
Old 12-17-2017, 12:49 PM   #14
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 19,683
Quote:
Originally Posted by RobbieB View Post
I would think that dropping 40% is not "about as much" as dropping 55%. And that 15% difference would be explained by the bonds and cash.
You are right, I didn't look at the numbers that closely, was going by earlier loose descriptions.

-ERD50
ERD50 is offline   Reply With Quote
Old 12-17-2017, 01:13 PM   #15
Recycles dryer sheets
Cayman's Avatar
 
Join Date: Nov 2015
Posts: 198
Quote:
Originally Posted by Backdraft57 View Post
Sorry should have posted link
https://www.gurufocus.com/buffett_as...llocations.php


Sent from my iPhone using Early Retirement Forum
Who knows if the author's got it right? One thing's for sure - the market will go up and it will go down. I stick with the basics of investing, my AA and I don't try to time the markets.
Cayman is offline   Reply With Quote
Old 12-17-2017, 04:01 PM   #16
Recycles dryer sheets
 
Join Date: Dec 2013
Posts: 320
I don't watch the cable financial stations but it seems like Buffet has been off the grid the last few months.
Free bird is offline   Reply With Quote
Old 12-17-2017, 07:55 PM   #17
Thinks s/he gets paid by the post
teejayevans's Avatar
 
Join Date: Sep 2006
Posts: 1,254
Quote:
Originally Posted by NW-Bound View Post
Eh, do not make fun of Buffett yet.

Considering that he's only 50% in stocks, and shuns high-flying tech stocks at that, he's doing quite well. Does that not mean his stocks and other deals he did beat the S&P?

I only bought BRK shares after the Great Recession, so just now looked back to see how he fared. From the top in late 2007 to the bottom in March 2009, the S&P lost nearly 50%. BRK lost 30%, and that's because of the cash and bonds in its portfolio.
Then compare him with Wessley,Wellington balance funds.
teejayevans is offline   Reply With Quote
Old 12-18-2017, 05:40 AM   #18
Full time employment: Posting here.
 
Join Date: May 2015
Location: Atlanta suburbs
Posts: 542
Do we confuse organizations or individuals with past successes with their ability for prognostications? All mutual funds put out their disclaimer, and I paraphrase loosely here "great past performance results don't necessarily mean future results will be the same". Shouldn't we assume the same disclaimer is true for successful individuals?
__________________

DEC-1982 is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Warren Buffet Winning 10-year $1M Bet dixonge Stock Picking and Market Strategy 18 06-30-2016 05:21 AM
(very) Early Warren Buffet RonBoyd FIRE and Money 14 06-04-2015 06:59 PM
A Warren Buffet-like investor's view on globalization wildcat Other topics 2 06-19-2007 02:46 AM
Warren Buffet the Billionaire Next Door crazy connie Other topics 26 11-29-2006 10:01 AM
Death Tax and the DarK Side of Warren Buffet Hydroman Other topics 29 09-09-2006 05:08 PM

» Quick Links

 
All times are GMT -6. The time now is 05:53 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2018, vBulletin Solutions, Inc.