Warren Buffett's Market Indicator Breaks 155%

Warren Buffett's Market Indicator Breaks 155%

On Monday, Berkshire Hathaway Inc. (NYSE:BRK.A)(NYSE:BRK.B) CEO Warren Buffett (Trades, Portfolio)'s favorite market indicator eclipsed 155%, close to its all-time high, on the back of several Big Tech companies continuing their rally from strong June-quarter earnings. • Warning! GuruFocus has detected 8 Warning Sign with AAPL. Click here to check it out. • The intrinsic value of AAPL The ratio of total market cap to gross domestic product, probably the "best" single measure of where valuations stand at a given moment according to the "Oracle of Omaha," reached 156.3%, up 7.6% from the July 1 level of 148.7%. Based on the current market valuation level, the predicted return of the U.S. market over the next eight years is -0.1% per year assuming that the valuation level reverts to the 20-year median. If the valuation level reverts to 130% of the 20-year median, an optimistic case, the expected market return increases to 3% per year. On the other hand, if the valuation level reverts to just 70% of the 20-year median, a pessimistic case, the expect market return declines to -4.3% per year. U.S. indexes build on four-month winning streak driven by Big Tech The Dow Jones Industrial Average closed at 26,664.40, up 236.08 from last Friday's close of 26,428.32. Apple Inc. (NASDAQ:AAPL) and Microsoft Corp. (NASDAQ:MSFT) gained 2.52% and 5.62%, with the former setting a new record intraday high of $446.55 on the ...
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