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Buffet Indicator Market Cap/GDP Ratio Reaches New All-Time High

US
  • As US equities continue to reach new all-time highs, mostly supported by the ultra-loose monetary policy, valuations are currently standing at extreme levels questioning how long this momentum can last for.
  • This chart (source: Real Investment Advice) shows that Warren's Buffett's favorite indicator, inflation-adjusted market cap / GDP ratio, rose to an all time high of 2.48, far above the 1.95 high reached during the 2000 dotcom boom.
  • While the market expects the momentum to continue in the near term, investors are gradually concerned that the tapering will eventually weigh on equities' trend in 2022.

Source: Real Investment Advice

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