Buffett indicator: whether to expect a collapse of U.S. exchanges?

Buffett indicator: whether to expect a collapse of U.S. exchanges?


We used to say that the folding of QE3 in the U.S. puts pressure on emerging markets. But can America itself – more precisely, its exchanges, painless exit incentive program ? Perhaps even Warren Buffett is preparing for sale at the U.S. stock exchanges .

There is a so-called ” indicator Warren Buffett “, which reflects the ratio of stock market capitalization to U.S. GDP . In late February it was announced that America’s stock market worth $ 24.6 trillion , as reported by the World Federation of Exchanges . March S & P 500 grew by 0.5 %. At the same time, recent data on GDP for the 4th quarter 2013. show that America produced goods and services to $ 17.08 trillion . Thus, the stock market capitalization of 142 % of U.S. GDP . What speaks Buffett , the billionaire owner of investment company Berkshire Hathaway?


Warren Buffett

” If the ratio of market capitalization to GDP is 70-80% , which means that the purchase of shares will bring you a very good income . If the ratio is close to 200% as it was in 2000 . Sometimes in 1999 . , You’re playing with fire” .

If we talk about the current situation , the head of Berkshire Hathaway has remained silent . But capitalization funds 142% of GDP – is too much. The risk increases on the background to minimize the program of quantitative easing , because it QE3 , coupled with low interest rates and other measures to stimulate prompts investors appetite for risk .

Fed Chairman Janet Yellen promises to continue his predecessor’s policy of Ben Bernanke is not going to raise rates , and inflation is kept at a low level , but experts say : too much of the U.S. economy depends on direct stimulation. Some analysts say openly that the exchange may fall off at least 50 %. This is evidenced by Mark Shpittsnagel financier successfully played on the crisis of 2008 .


Mark Shpittsnagel

” We have no right to wonder if the market will collapse . It is inevitable , and we should be prepared for such a development .” Echoes and Marc Faber , Swiss investor and author of the blog Gloom Boom & Doom Report. Recall that in 2009 . this man , anticipating the moment when the U.S. stock market will reach “bottom” .


Marc Faber

“We’re inside a giant financial bubble . It can burst at any moment.”

Faber argues that the Fed’s policy , which is supported by President Barack Obama , has become a real disaster for the country’s economy . According to him, America supports now the punters , but does absolutely nothing for ordinary citizens . Policy of low interest rates pooschraet those at risk and investing in risky assets . At the same time , the one who saves and wants to support his family , left with nothing , says Faber.

Finally, the portal of The Motley Fool gives a list of signs indicating overheating of the market .

Shares of companies in the first day of IPO soar by an average of 18% , and the highest rate in 10 years
Index Shiller P / E, reflecting the ratio of share price to income ratio reached 25.8 against the historical average value of 16.5.

Profitability of American companies is growing and revenue stagnates

On the stock market falls 66.9 % of all investments of investors acting alone , which is close to the level of 2007 .
Increasingly used leveredzhing respectively growing debt

Many famous investors move money into cash

China’s GDP growth slows down , and there is risk of explosion of the credit bubble that has an impact on other countries , while the U.S. Federal Reserve pegged growth , but also remains slow