The Buffett-Indicator Points To Bigger Global Bubble Than In 2007 (Thanks To The Bubble-Blowing Federal Reserve)

by confoundedinterest17

The Buffett Indicator is a ratio used by investors to gauge whether the market is undervalued, fair valued, or overvalued. The ratio is measured by dividing the collective value of a country’s stock market by the nation’s GDP. There is even a global version of the Buffett Indicator: global market cap / global GDP.

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And its a doozy!

But it we look at the Shiller CAPE (Cyclically Adjusted Price Earnings) ratio, we can see a relative bubble compared to 2007, but it is second only to the bubble of 2000.

But today is different than 2007 or 2000. Why? The Federal Reserve has become a permanent fixture in blowing asset bubbles, like in home prices. Yes, we are back to rates of growth in house prices from the peak of the housing bubble in 2005.

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When will Powell and the FOMC take the oxygen mask off? Or will they??


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