LETHAL TAPER

Lethal Taper: The Buffett Valuation Indicator Flashing Red (Are Stocks And Housing Too ‘Frothy’?)
Market Cap to GDP is a long-term valuation indicator that has become popular in recent years, thanks to Warren Buffett, the Oracle of Omaha. Here is a chart of the market cap to nominal GDP, aka the Buffett Valuation Indicator. Note that we are currently in the second highest spike since 1952.

Here is the Buffett Valuation Indicator since 2000 versus the Wilshire 5000 Total Market Full Cap Index. Note that they both peak in 2007, then decline.

This post was published at The Burning Platform on 13th October 2014.