What Is the Buffett Indicator?

Warren Buffett was once quoted saying that this is one of the best indicators to kind of show where the market stands. There's a couple of different ways that you can value the market using the quote unquote Buffett indicator. All it is is market capitalization divided by economic growth, right? or the size of the economy.

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IN THIS EPISODE, YOU’LL LEARN:

09:18 - Understanding the basics of valuations and how to interpret price multiples.
17:00 - What the Shiller P/E (CAPE) ratio is, and why it is telling us future returns are expected to be low going forward.
25:46 - What Lance thinks are some catalysts that could cause the market to mean revert to historically normal valuation levels.
31:35 - Why the Buffett Indicator is a valuable valuation tool and why it is saying markets are overvalued today.
38:05 - The relationship between earnings and GDP and why EPS cannot grow faster than GDP in the long run.
49:50 - Why Lance thinks bonds are the best investment right now and what investment strategy he recommends.
And much, much more!

*Disclaimer: Slight timestamp discrepancies may occur due to podcast platform differences.

BOOKS AND RESOURCES

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Lance’s Youtube Channel: Real Investment Show with Lance Roberts.
Lance Podcast: Real Investment Show with Lance Roberts.
Related Episode: Studying SuperInvestors, Investing Checklists, & Seritage Growth Properties w/ Tom Botica - MI148.

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