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James Li
James Li
Articles (1097)  | Author's Website |

Warren Buffett’s Market Indicator Breaks 154%

Stock markets continue setting new highs as US removes China as a currency manipulator

January 13, 2020 | About:

On Monday, Berkshire Hathaway Inc. (NYSE:BRK.A)(NYSE:BRK.B) CEO Warren Buffett (Trades, Portfolio)’s favorite market indicator stood at 154.7%, approximately 1.6% higher than the 153.1% reading on Dec. 30, 2019, and 6.2% higher than the previous high of 148.5% set in March 2000.

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Dow and S&P set new records as U.S. removes China as a currency manipulator

The Dow Jones Industrial Average closed at 28,905.90, up 82.13 points from Friday’s close of 28,823.77 on news that the U.S. Treasury has removed China as a currency manipulator.

0f5ee69a89a4d4d16d7351611c2e618e.png

CNBC columnist Thomas Franck said that Treasury Secretary Steven Mnuchin reiterated in a Sunday Fox News interview that Phase 1 of the U.S.–China trade deal is an important step and that Beijing has agreed to purchase over $200 billion in U.S. goods over the next two years.

Markets begin 2020 significantly overvalued

As the stock market continues setting new highs, the market becomes more overvalued. Buffett’s favorite market indicator, which captures the ratio of the Wilshire 5000 full-cap index to the U.S. gross domestic product, eclipsed 154% on Monday.

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Value screens continue identifying opportunities

Despite the significantly overvalued stock market, GuruFocus’ value screens still identify good investing opportunities domestically and internationally. Table 1 reports the value screener record for each of our major value screens.

Screener

USA

Asia

Europe

Canada

UK/Ireland

Oceania

Latin America

Africa

India

Graham Net-Net

117

511

256

37

40

11

7

12

155

Undervalued Predictable

38

89

217

8

49

6

45

2

11

Buffett-Munger

21

101

120

3

29

1

24

4

41

Historical Low PS

48

111

110

1

20

1

23

8

35

Historical Low PB

51

138

150

3

33

1

27

8

58

Peter Lynch Screen

21

49

43

0

10

0

6

3

21

52-week Lows

1260

3974

2290

135

995

66

600

129

700

52-week Highs

3569

3473

7825

309

2267

244

1111

150

667

Table 1

Disclosure: No positions.

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About the author:

James Li
I am an editorial researcher at GuruFocus. I have a Master's in Finance from SMU, and I enjoy writing reports on financial trends and investor portfolios. Follow me on Twitter at @JamesLiGuru!

Visit James Li's Website


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