JoshTrent
Recycles dryer sheets
- Joined
- Mar 31, 2011
- Messages
- 112
This article lays out an interesting indicator that WB supposedly uses..
https://www.msn.com/en-us/money/markets/warren-buffetts-favorite-market-indicator-hits-205percent-signaling-stocks-are-way-too-expensive-and-a-crash-may-be-coming/ar-AANLNCp?li=BBnb7Kz
A basic valuation of the entire market calculated:
Wilshire 5000 Total Market / GDP
Currently this stands at roughly 205% ($46.69T / $22.72T) - as of 2Q21 GDP
The article notes that for both the dot com bubble (late 1990s) and the 2007/2008 crisis, this indicator remained under 150%.
The article does acknowledge there are Companies whose valuation is based domestically, but don't contribute 100% of their income to the GDP.
I respect those who hold their AA through these downturns. However, I pose the following questions to those who take a more active approach..
- Are you preparing for a "crash" in the near future?
- If so, how?
I have found myself of late, trimming some earnings off Index Funds (in my tIRA & Roth) in very small increments to cash on a bi-weekly basis. I think it's the "the NASDAQ hits a new record" that gets me thinking..
https://www.msn.com/en-us/money/markets/warren-buffetts-favorite-market-indicator-hits-205percent-signaling-stocks-are-way-too-expensive-and-a-crash-may-be-coming/ar-AANLNCp?li=BBnb7Kz
A basic valuation of the entire market calculated:
Wilshire 5000 Total Market / GDP
Currently this stands at roughly 205% ($46.69T / $22.72T) - as of 2Q21 GDP
The article notes that for both the dot com bubble (late 1990s) and the 2007/2008 crisis, this indicator remained under 150%.
The article does acknowledge there are Companies whose valuation is based domestically, but don't contribute 100% of their income to the GDP.
I respect those who hold their AA through these downturns. However, I pose the following questions to those who take a more active approach..
- Are you preparing for a "crash" in the near future?
- If so, how?
I have found myself of late, trimming some earnings off Index Funds (in my tIRA & Roth) in very small increments to cash on a bi-weekly basis. I think it's the "the NASDAQ hits a new record" that gets me thinking..