Gavekal Capital: "The Warren Buffet Indicator" At Most Extreme Level Since December 2000

Thursday, February 20, 2014

"The Warren Buffet Indicator" At Most Extreme Level Since December 2000

The ratio of the market value of equities outstanding to nominal GDP aka "The Warren Buffet Indicator" is at the highest level in about 13 years. This ratio became associated with Warren Buffet after he remarked in a 2001 Fortune Magazine article that this "is probably the best single measure of where valuations stand at any given moment". The numerator comes from the Flow of Funds so we will have to wait until March 6th to confirm that this relationship has moved to an even higher extreme in 4Q13. But regardless, you can add this to the list of valuation measures that show stock valuations are at lofty levels.

About Gavekal Capital

Gavekal Capital is a US registered investment advisory firm that manages the Gavekal Knowledge Leaders Strategy. Knowledge Leaders are a group of the world’s leading innovators with deep reservoirs of intangible capital. These companies often possess competitive advantages such as strong brand, proprietary knowledge or a unique distribution mechanism. Knowledge Leaders are largely service-based and advanced manufacturing businesses, often operating globally. Gavekal Capital seeks to identify the world’s leading knowledge companies through a proprietary process that analyzes corporate knowledge investments.
We offer the Gavekal Knowledge Leaders Strategy in multiple products for global investors. For more information about our product offerings please visit http://www.gavekalcapital.com.
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