Summary
Phil presents the “Buffett Indicator” — US stock market capitalization to GDP ratio. As of early 2021, US markets are at ~200% of GDP vs. fair value of ~120% — 2 standard deviations above historical trend, a level that should only occur 2% of the time. Phil notes this will be even more extreme by 2026. His key insight: nobody ever compares US land value to GDP — PSE does, and the results are even more revealing (to be shown in upcoming email).
Key Claims
- US stock market to GDP ratio hit ~200% in 2021 vs. fair value ~120%. — confidence: high
- At 2 standard deviations above trend, current market valuations should only occur 2% of the time. — confidence: high
- By 2026, expect even more serious overvaluation before the great selloff. — confidence: high
- Nobody compares US land value to GDP — PSE is unique in tracking this. — confidence: high