Buffett Indicator : 2.007 (As of 2024-12-31) NEW
Buffett Indicator was 2.007 as of 2024-12-31, according to GuruFocus. Historically, Buffett Indicator reached a record high of 2.09 and a record low of 0.31, the median value is 0.88. Typical value range is from 1.24 to 1.78. The Year-Over-Year growth is 15.28%.
In particular, consider the remarkable gains in the S&P 500 Index, which was on track to close up more than 25% for 2024, well ahead of Wall Street analysts' forecasts, in one of its strongest annual performances of the last quarter-century.
Buffett Indicator: The Latest Data
With the Q3 GDP third estimate and the December close data, we now have an updated look at the popular "Buffett Indicator" -- the ratio of corporate equities to GDP. The current reading is 207.3%, up from the previous quarter, and signaling an overvalued market.
The U.S. market, worth a whopping $63 trillion as of December, added nearly $11 trillion in market capitalization in 2024.
U.S. large cap equities are expected to deliver annualized returns of 6% over the next decade, while international developed market equities are projected to slightly outperform at 7.1%. This edge comes from more attractive valuations, even as U.S. equities benefit from stronger earnings growth.
The Augmented Reality (AR) software and services market will be valued at US$33.1 billion in 2024 and is forecast to grow to a US$192.8 billion market valuation by 2030, growing at a Compound Annual Growth Rate (CAGR) of 34.1% between 2024 and 2030.
The Buffett Indicator forecasted an average of 83% of returns across all nations and periods, though the predictive value ranged from a low of 42% to as high as 93% depending on the specific nation. Accuracy was lower in nations with smaller stock markets.
Buy And Hold For The Long Term
Since 2020, the investing legend has dumped many financial, drug and airline stocks — not long after buying them for the first time. However, Buffett continues to prioritize finding and buying quality stocks at a fair price — and holding them for the long term.
This stance hints at one thing: Buffett sees the market as significantly overvalued. Much of this cash isn't being reinvested in the stock market but rather parked in short-term U.S. Treasury bills.
Global growth forecasts are largely unchanged from last quarter, with the pace of economic expansion in 2024 slowing moderately in 2025. Easing inflation, resilient consumers, and a broadening of central bank rate cuts underpin our expectations for a soft landing.
Its analysts predict the S&P 500 will rise 12.6% to end 2025 at 6,666. Savita Subramanian, BofA's head of U.S. equity strategy, expects U.S. cyclical stocks to especially perform well. BMO Capital Markets forecasts the S&P 500 will reach 6,700, reflecting a gain of 13.2%.
"The first rule of an investment is don't lose [money]. And the second rule of an investment is don't forget the first rule. And that's all the rules there are." This quote from legendary billionaire investor Warren Buffett has become one of his most well-known aphorisms.
In Warren Buffett's portfolio as of 30 Sep 2024, the top 5 holdings are (AAPL) APPLE INC (26.24%), (AXP) AMERICAN EXPRESS CO (15.44%), (BAC) BANK OF AMERICA CORP (11.88%), (KO) COCA-COLA CO/THE (10.79%) and (CVX) CHEVRON CORP (6.56%).
The total market valuation is measured by the ratio of total market cap (TMC) to GNP -- the equation representing Warren Buffett's "best single measure". This ratio since 1970 is shown in the second chart to the right. Gurufocus.com calculates and updates this ratio daily. As of 01/10/2025, this ratio is 202.2%.
The 90/10 rule in investing is a comment made by Warren Buffett regarding asset allocation. The rule stipulates investing 90% of one's investment capital toward low-cost stock-based index funds and the remainder 10% to short-term government bonds.
Despite being the sixth-richest person globally, Warren Buffett continues to drive a 2014 Cadillac XTS he purchased with hail damage. Although he can afford any luxury vehicle, Buffett prefers the practicality of his 10-year-old car.
In the first quarter of 2024, the U.S. Buffett Indicator, which measures the ratio of the stock market's total value to the country's GDP, has exceeded 200%. This notable achievement underscores the significant growth and valuation of the U.S. stock market relative to the economy.
So, while the CAPE ratio is the world's most reliable stock market forecaster, it pays to think long-term, maintain a consistent allocation, and ignore the useless rambling of forecasters and our guts.
Revenue in the AR & VR market market worldwide is projected to reach US$46.6bn in 2025. Revenue is expected to exhibit an annual growth rate (CAGR 2025-2029) of 7.42%, leading to a projected market volume of US$62.0bn by 2029.
The economy should expand at an upwardly revised pace of 2.7% year-over-year in 2024 (from 2.6%) and 2.0% in 2025 (from 1.7%). US real GDP growth in 2026 should settle at its potential rate of 1.8%. Inflation is expected to stabilize at the Fed's 2% target in Q4 2025, later than the original Q2 2025 estimate.
The all-items Consumer Price Index (CPI), a measure of economy-wide inflation, decreased 0.1 percent from October 2024 to November 2024 and was up 2.7 percent from November 2023. The CPI for all food increased 0.1 percent from October 2024 to November 2024, and food prices were 2.4 percent higher than in November 2023.