Stocks vs. GNP
February 4, 2009
Below is the graph of total stock market capitalization vs. Gross National Product. According to Warren Buffet, stocks become attractive investments when total market cap is in within 70-80% of GNP. Right now, we are in the middle of that range, at 75%.
Note, however, that based on this metric, the ratio still is higher than it was during World War II, or during the recession in 1980, when it stood around 50%. To get to that level, the market will need to drop by another third.
For more discussion, take a look at this article from Fortune.
Entry Filed under: Market Conditions. .
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1. More on Market Valuation « Sensible Investing | April 15, 2009 at 3:27 am
[...] 15, 2009 I wrote earlier about comparing total stock market capitalization with Gross National Product. This article from [...]