WARREN BUFFETT INDICATOR JUMPS TO RECORD HIGH
One of the indicators that assess the situation on the world stock market is the Warren Buffett indicator. It is calculated by dividing the total capitalization of stocks traded in markets around the world by the volume of global GDP. An indicator value above 100% indicates that global stocks are overvalued. This means that at any time they can sharply fall in price. To date, the Warren Buffett indicator has reached the level of 123%. The previous record value of this indicator was 121%. Buffett previously said that the high value of the indicator should be considered by investors as a warning about a possible stock market crash. At the same time, analysts note that the Buffett indicator has two serious drawbacks. First, current stock prices are used to calculate it. At the same time, the data on world GDP are taken for the previous period. In addition, some countries do not regularly publish statistics on gross domestic product and there is no confidence in their reliability.