Warren Buffett's right hand man Charlie Munger was fundamentally anti-social

 ... "You don’t need other people. The point of getting rich is so you don’t have to need other people, so you don’t have to get along with others.” ...

Quoted here. 

 

Buffett Indicator in the news

 Wall Street on red alert as Warren Buffett’s favorite stock market gauge hits the worst reading EVER

... The so-called Buffett indicator divides the total value of all US stocks by the total economic output of the United States, delivering one simple number that sums up how investors are feeling at the moment.

Buffett said that a reading of 100 percent suggests markets are in balance - in other words, the stock market is worth about as much as the US economy produces in one year - while a lower figure means stocks are undervalued.

Right now, the index hit its highest reading ever - 232 percent - indicating that stocks are historically overvalued. ...

Right now, the indicator is well above its last two all-time highs: The 219 percent reading seen at the height of the 2021 pandemic stock market frenzy, and the 163 percent level at the 2000 peak of the dot com bubble. ...                                                                                                              

 

Using SPX tonight, instead of the Wilshire 5000 as Buffett does, we're at 224.8 vs. 1938-2019 mean level of 81!

The market has been obscenely overvalued way beyond the 1938-2019 experience for six consecutive years and counting, and investors keep keeping it that way by continuing to pour money into it. It won't unwind until they stop. And since they believe that the market goes only up, it will probably take a market-loathing mother of all economic disasters to change their minds and make them do so.

Meanwhile real return since August 2000 (139), the previous secular peak, is now 5.27% per annum through March 2026 (25 years, 7 months).

Real return from January 1975 to August 2000 (the previous 25 years, 7 months) was 11.19% per annum, 112% better because valuation was 61 in 1975 and falling.

Investing at high valuations by definition produces poorer results. Compare August 1965 (118) to August 2000 (139): 6.95% per annum real. 

(I need to update this chart for 2024 and 2025!)

 

 

SPX/GDP, then vs. now

SPX(average annual)/GDP(trillions of dollars), then vs. now

1938: 131

1942: 52

1964/1965: 118 

1982: 35

2000: 139 

2009: 65

2019: 135 

2025: 202

Median 1938-2019: 81

This ratio has been above 139 for six consecutive years 2020-2025, which is unprecedented for the era shown. Even so, return places third because dividends are puny in the age of obscenely overpaid dirty rotten CEOs and management.

Return: nominal/real, average per annum, dividends fully reinvested

12/1942-12/1965: 15.43%/12.30%

12/1982-12/2000: 16.66/12.97

12/2009-12/2025: 14.09/11.23 

 

 

Save the greater sage grouse from the worshippers of electricity, the renewable energy phonies, AI data centers, NV Energy, Berkshire Hathaway, Warren Buffett, the Bureau of Land Management, and of course Donald Trump

This poor little bird has an awful lot of enemies.

 

The AI boom comes to America's loneliest place

Oliver Roeder, Financial Times Magazine 

 “In Nevada, it’s very hard to piss everyone off, and this has been about the closest example.”

The total value of all the stocks on the U.S. stock market is now 216% of GDP

 

... The total value of all the stocks on the U.S. stock market is now 216% of gross domestic product, a metric once cited by Warren Buffett as his favorite yardstick for whether the market was cheap or expensive. The current reading is “one of the highest levels on record,” according to calculations by Jennifer Nash at Advisor Perspectives. According to another long-running measure, the Tobin’s Q, the market is more than twice average valuations.  ...

More. 

Let's check in on the S&P 500 version of the Buffett Indicator

The S&P 500 averaged 6,029.95 in June 2025.

Nominal GDP in 2Q2025 from the second estimate yesterday was $30.3539 trillion.

The first divided by the second yields 198.65, 145.25% elevated above the long-term median of 81.

Off the chart. 

Where angels fear to tread.

 

 

Nosebleed valuations continue despite recent stock market declines

 It's a long way down to normal.

The 2022 lows got us back only to the 2000 high, and people thought it was the end of the world when all it was was a good beginning lol.

 

Nominal GDP in 1Q2025 is estimated at $29.9776 trillion by the BEA this morning.

$SPX closed at 5611.85 on March 31, 2025.

That yields a ratio of 187 vs. the historical mean of 81, or 131% overvalued. 

Guru Focus gets similar results from the Buffett Indicator:

 

The Buffett Indicator in the news

Some people are paying attention.

The last chart below tracks the average annual valuation from 1920 through last year, based on the S&P 500. The average level for 2024 will depend on the third and final estimate of annual GDP at the end of March 2025. 209% is a real time snapshot using the Wilshire 5000 index.

Stocks remain wildly overvalued and seriously underperforming

 The S&P 500 averaged 5,792.32 in October 2024 (the all-time high was on 10/18 at 5,864.67).

Nominal GDP was updated on Oct 30th at $29.349924 trillion for 3Q2024.

That yields a ratio of SPX/GDP of 197.35 vs. median of 81.

Stocks remain wildly, obscenely, off-the-chart overvalued.

The formula is GDPx = SPX.

29.35(81) = 2,377.

The market would have to fall 3,415 points just to hit median valuation at current GDP, or about 59%.

You can see a similar analysis here, where the median is 79.7 vs. current 200.7.

Real return from SPX since Aug 2000 is now about 5.1% per annum vs. 7.4% before that (including the Great Depression, the depression of 1920, and every collapse before that going back to 1871), 31% worse.

We are living through developments echoing the lunatic era of the 1920s, which ended in tears.

Owe no man anything . . ..

 

 

 

The naysayers will say Buffett was too early then, and now

 

Warren Buffett practices what he preaches

 

I found the source for Trump's well-founded fear of an auto industry bloodbath

 CNBC reports today:

Why a small China-made EV has global auto execs and politicians on edge :

There’s fear among global automakers that Chinese rivals like the Warren Buffett-backed BYD could flood their markets, undercutting domestic production and vehicle prices to the detriment of their own auto industries.

“The introduction of cheap Chinese autos — which are so inexpensive because they are backed with the power and funding of the Chinese government — to the American market could end up being an extinction-level event for the U.S. auto sector,” the Alliance for American Manufacturing, a U.S. manufacturing advocacy group, said in a report last month.

BYD sold 1.57 million battery EVs last year, up from just 130,970 all-electric vehicles in 2020. That sales growth was enough to surpass Tesla to become the world’s largest producer of electric vehicles in late 2023. 

The rise of BYD and other Chinese automakers led Tesla CEO Elon Musk in January to warn that Chinese automakers will “demolish” global rivals without trade barriers. ...

The company has quickly rolled out new and updated products. It’s also rapidly established manufacturing, as it has its eyes set on factories in Thailand, Brazil, Indonesia, Hungary, Uzbekistan and, potentially, Mexico. ...

Former President Donald Trump – the front-runner among Republicans in the 2024 presidential race – on Saturday suggested instituting a 100% tariff on cars made in Mexico by Chinese companies, should he be elected to a second term.

It's been a terrible year so far for investors in US Treasury securities because of the rising rate environment, but great for stocks

UST yields rose a net 1.31% in the aggregate week over week on 7/28.

DFF rises to 5.33% after the latest FOMC rate hike.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year to date Treasury, Total Bond, Cash, and Total Stock performance using popular Vanguard funds:

VFISX +0.75% VFITX 0.90% VUSTX 1.58% VBTLX 2.05% VMFXX 2.75% lol VTSAX 19.99%!

Stocks have been the place to be, and cash has beaten even the total bond market.

Meanwhile stocks are obscenely overvalued at 169 using the latest report of GDP out Thursday:

 

The stock market remains obscenely overvalued

 On Friday it hit 167.

Off the chart.

At 194 at the January 2022 high or 139 at the October 2022 low, it's all the same to me

Obscenely overpriced.

 

 

The percentage holding full-time jobs through September 2022 held above 50%, disappointing the ubiquitous advocates of a Fed interest rate pivot

 Full time as a percentage of civilian population in September was 50.3%, and for 2022 through September averaged 50.15%.

Not bad, considering.

The Fed will see little evidence in this figure that its interest rate increase policy is harming employment.

Stocks on Friday collapsed after a head fake to start the week to within 1.5% of the 52-week lows set a week ago.

Long term investment grade bonds and US Treasury securities also revisited lows from 9/27/22, coming within pennies of those benchmarks.

30-year yield for UST is back up to 3.86%. It was 3.87% on 9/27. At the beginning of 2022, yield was a paltry 2.01% by comparison.

UK gilts are experiencing the same action despite the Bank of England intervening to buy bonds. 

The bond crisis is not over.

With yields soaring across the board no one wants to own the lower paying outstanding issues, which are legion, destroying their value.

But everything in the global economy is based on those, piled up in earnest after The Great Financial Crisis of 2008, and in orgiastic frenzy afterwards during the late pandemic.

Bond yields in 2022 are telling you that they are overvalued by 92%.

Stock market valuation is telling you a similar thing.

From 1938 through 2019 the median ratio of the S&P 500 to GDP is 81. In 2020 we averaged 154, or 90% overvalued.

This is the major deflationary headwind facing the world, the other side of the COVID-19 inflationary shock coin.

Push here, it comes out over there.

Modern central banking cannot escape this conundrum any more than the gold standard could.

The only thing the individual can do in this situation is to owe nothing and save everything, preferably in your hands.

Good luck.

 

 

 

 

 

 

 

 

 

 

 

 

LOL, the Drudge help writes "takies" talking about "Thiel" "taking aim"

 Takies aim at Bitcoin's 'enemies' Dimon, Fink...

Warren Buffett, the king of contraception funding, thinks women waste their brains having children

Two peas in a pod dedicated to deciding against life.

If you want to know why America is dying, look no further than Warren Buffett, a man at war with human nature, who frankly doesn't care that without fertility there will be no one left to consume.

From the story in Bloomberg, here:

“Buffett alone will give more than all of the other foundations combined in reproductive health,” she said. “We already are this year [2008], and that will continue.” [Judith] DeSarno declined to comment for this article, other than to say, “I am incredibly proud of this work and the dramatic decrease in unintended pregnancies.” ...

Quietly, steadily, the Buffett family is funding the biggest shift in birth control in a generation. “For Warren, it’s economic. He thinks that unless women can control their fertility—and that it’s basically their right to control their fertility—that you are sort of wasting more than half of the brainpower in the United States,” DeSarno said about Buffett’s funding of reproductive health in the 2008 interview. “Well, not just the United States. Worldwide.” ...

In the 1960s, the [Buffetts] set up what was then called the Buffett Foundation, which focused on nuclear disarmament and reproductive health, including helping to fund Planned Parenthood as well as the development of RU-486, the so-called abortion pill. In the late ’70s, the duo entered into an unusual arrangement—they remained married, but Susan moved to San Francisco. 

Market cap to GDP ratios March 2009 vs. March 2014 flash valuation warning

Probably the broadest measure for stock market valuation purposes is total stock market capitalization divided by GDP. Warren Buffett uses it and John Hussman has spoken approvingly of the measure.

But because we have to wait for GDP numbers for at least a month after the quarter end, the ratio cannot be a real-time valuation tool. And given that revisions to GDP can be substantial in the 2nd and 3rd estimates, as well as in the annual summer revisions, precision using the 1st estimate is also wanting. Nevertheless the calculation provides a big picture snapshot of where we have been in the market cycle, and gives forward guidance for long term investors. Presently it appears to counsel taking chips off the table and waiting in cash for a better opportunity to invest. 

For the following I use nominal figures for GDP as revised in the most recent updates from bea.gov and calculate market cap using the popular Wilshire 5000 (level x $1.2 billion) as close to March 31 as practicable.

A comparison of March 2009 to March 2014 is instructive, since March 2009 was a pretty good buying opportunity both in terms of the absolute level of the stock market after its decline and the coincident Shiller p/e valuation which was about 13.3 on March 1. The ratio has almost doubled in the interim, indicating that now is probably not a good time to commit large new sums to stock markets. The current Shiller p/e begins the day at 26.31, which is also nearly doubled from five years ago.

That said, the 10 year Treasury presently pays just 69 basis points more than the dividend yield of the S&P500. At the October 2007 stock market high, the 10 year Treasury paid 276 basis points more than the dividend yield of the S&P500. You could argue the Fed caused the markets to crash by taking rates much too high in 2006 and 2007 and that Janet Yellen is bound and determined not to let that happen again anytime soon, meaning stock markets could have higher to go. Keep in mind that the inflation-adjusted all-time high of the S&P500 was 2045.09 on August 1, 2000. We're at 1962.46 this morning. 

March 30 2009

$10.32 trillion market cap

---------------------------------------------- = 0.72

$14.38 trillion GDP

March 31 2014

$23.99 trillion market cap

---------------------------------------------- = 1.41

$17.02 trillion GDP

Run away: Today's total market capitalization/GDP ratio is 1.46

$25.003 trillion
-------------------  = 1.46 (June 23, 2014: a really bad time to invest)
$17.101 trillion


$10.222 trillion
------------------- = 0.71 (April 6, 2009: a pretty good time to invest)
$14.381 trillion













h/t John Hussman, Warren Buffett