by onfallen
Figured out something interesting; let’s discuss.
Assumptions:
- US GDP will fall by X percentage this year
- GDP 2019 is $21.73 Trillion
- Total market cap is $28.48 Trillion
- Buffett indicator = market cap / gdp
Scenarios:
X – Buffett Indicator
5% – 138%
10% – 146%
15% – 154%
20% – 164%
25% – 175%
For reference,
dot com bubble height: 140%
2008: 107%
2020 All time high: 151%
The question, to economists, what is a reasonable estimate of GDP decline given the composition of US economy? Would that number make Buffett indicator go thru the roof?
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