Relevant:
- You're Crazy If You Think Investing In Equities Today Will ‘Reduce Risk'
- A flawed argument used by Warren Buffett could be setting stocks up for 'one of the worst disasters in history'
- Turk: US Debt Compounding, Stock Market Going Pre-Hyperinflationary, Gold Fair Value $12,000/oz
- Lofty Valuations and Smart-Money Positioning Portend Ill
- Canadian housing bubble goes into full mania mode -- Canadian debt-to-personal income ratio near 145% while US at peak of the housing bubble was at 125%.
2017-05-12 — minyanville.com
Above is a chart of [total stock market cap to GNP] I put together using data from the Fed. It shows the dotcom mania peak in this ratio was 180%. Today, it stands at 179%. So with valuations matching their all-time bubble peak, is Buffett telling investors they are once again "playing with fire"? Not even close. In fact, he's not only telling them it's not a bubble but that stocks actually look "cheap." What gives?
Well, he's found a new "most important metric" which seems to be the level of interest rates. In other words, valuations don't matter as much as they did in the past because "this time is different" in that interest rates are so low.
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