Not yet a bargain
Jun 02, 2022
The valuation measure “market cap-to-GDP” is often referred to as the Buffett indicator, as the famous value investor was the first to introduce this simple measure as a more reliable way to detect market excesses and opportunities in US equities. What does this ratio currently tell us ? After the fall, US markets are certainly cheaper than they were at the beginning of the year ( where market cap was twice US GDP ! ). However they are currently still above the levels seen at the peak of the Internet bubble. Let’s not fool ourselves into thinking that markets are cheap and stay selective in our investments.