Warren Buffett’s Market Warning Is Hard to Ignore. But I’d Buy These 3 Stocks Anyway.
Stocks continue to test record highs. But every bullish step forward pushes the market closer to a correction, if not a full-blown bear market.
That’s the interpretation of the so-called Warren Buffett indicator at this time, anyway. The ratio comparing the total market cap of the U.S. stock market (as measured by the combined value of the Wilshire 5000’s companies) to the nation’s gross domestic product, or GDP, currently stands at a record high of 237.5%. It’s a sign that stocks are dangerously overvalued.
For perspective, this indicator only peaked at 138.5% at the height of the dot-com mania in early 2000, and barely and briefly eclipsed 100% in 2007, right before the subprime mortgage meltdown upended the rest of the domestic economy. Warren Buffett also recently commented in an interview with CNBC that “prices for an awful lot of things will look very silly.” Investors have good reason to be concerned.
Source: www.fool.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.