The Warren Buffett Indicator

Broken Pie Chart

English - September 29, 2018 01:13 - 20 minutes - 18.5 MB - ★★★★★ - 16 ratings
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Previous Episode: Using Big Data and Machine Learning to Pinpoint Stocks Earnings Surprises

Next Episode: Two Main Things People Get Wrong Comparing 1970’s Bonds in Rising Rate Environment to Potential Rise in Rates Today Show Summary:

Welcome to the Broken Pie Chart Podcast Episode 8. In this episode Derek Moore reviews the so-called Buffett Indicator as well as the Shiller PE Ratio. With markets once again at all-time highs we are seeing some various articles and commentary on how to tell what market valuations might be considered too high or low.

Key Takeaways:

• What is the Warren Buffett Indicator? • How is the Buffett Indicator calculated? • Where to find the Nominal GDP and market cap to use to calculate the Buffet Indicator • How do interest rates affect stock market valuations? • Present value versus future value of future earnings estimates • What is the Shiller PE Ratio? • How is the Shiller PE Ratio Calculated? • Rolling average of S&P 500 Index earnings vs current PE Ratio • Possible solutions to protecting downside market moves • How valuation indicators may or may not predict future market moves

Mentioned in this Episode:

Razor Wealth article explaining Buffett Indicator https://razorwealth.com/the-buffett-indicator-explained/

Fortune Article http://archive.fortune.com/magazines/fortune/fortune_archive/1999/11/22/269071/index.htm

Nominal GDP

https://fred.stlouisfed.org/series/GDP

Wilshire 5000 Full Cap Price Index

https://fred.stlouisfed.org/series/WILL5000PRFC

Nonfinancial corporate business; debt securities; liability, Level (NCBDBIQ027S)

https://fred.stlouisfed.org/series/NCBDBIQ027S

Shiller PE Ratio

http://www.multpl.com/shiller-pe/

Broken Pie Chart Book by Derek Moore https://amzn.to/2MibTSk