The indicator that tells us if its a good time to invest
The Buffet indicator, according to the oracle himself, “probably the best single measure of where valuations stand at any given moment”. Calculated by simply dividing the total market capitalization (shares x price) by the GDP or GNP (which is the same as GDP but it includes everything produced by residents of a country abroad). This indicator has reached all-time highs in terms of how overvalued the stock market is, which is a warning for all investors since it tells us that valuations are trading above their actual value. During the past summer, Warren Buffet decided to sell many of his shares. In this episode, I’m going to tell you how this indicator works and how it helped Warren buffet to avoid massive losses in the stock market. Furthermore, we’ll see how the future of the markets can be predicted thanks to this indicator, and the potential annual returns in global markets.