On Feb. 1, Berkshire Hathaway Inc. BRK.ABRK.B CEO Warren Buffett (Trades, Portfolio)'s favorite market indicator stood at 139.8%, up approximately 4.7% from the Jan. 4 reading of 135.1%.
Buffett mentioned that the percentage of total market cap to gross domestic product is "probably the best single measure of where valuations stand at any given moment." In December 2020, GuruFocus developed a modified version of the Buffett Indicator by adding the total assets of the Federal Reserve Bank to the denominator.
U.S. stock market starts new month higher
The Dow Jones Industrial Average traded at an intraday high of 30,259.83, up 277.21 points from last Friday's close of 29,982.62 but down 928.55 points from the record high of 31,188.38 set on Jan. 20.
U.S. markets ended January on a low, with the 30-stock index closing last Friday below 30,000 for the first time since Dec. 14, 2020. The broad market indexes each tumbled 3% during the last week of the month, resulting in the Dow and Standard & Poor's 500 index ending in the red for the first month out of the past four months.
Shares sold off during the final week of January on the heels of increased speculative trading in high short interest stocks like GameStop Inc. GME.
Several Big Tech stocks remain overvalued based on GuruFocus' exclusive valuation method
Despite the late January market selloff, several major technology companies like Facebook Inc. FB, Apple Inc. AAPL and Alphabet Inc. GOOGLGOOG remain overvalued based on the GF Value measure, the website's exclusive valuation method that considers a company's historical price multiples and adjusts for past performance and future growth estimates.
Shares of Facebook FB traded around $261.63, showing that the stock is fairly valued based on Monday's price-to-GF Value ratio of 0.92.
GuruFocus ranks the Menlo Park, California-based social media giant's profitability 9 out of 10 on several positive investing signs, which include profit margins and returns outperforming over 90% of global competitors. The website ranks Facebook's business predictability five stars out of five on the back of the company's strong and consistent revenue and earnings growth over the past 10 years.
Gurus with large holdings in Facebook include Chase Coleman (Trades, Portfolio)'s Tiger Global Management, Spiros Segalas (Trades, Portfolio)' Harbor Capital Appreciation Fund and Steve Mandel (Trades, Portfolio)'s Lone Pine Capital.
Apple
Shares of Apple AAPL traded around $134.32, showing that the stock is significantly overvalued based on Monday's price-to-GF Value ratio of 1.81.
The Cupertino, California-based tech giant reported last week that revenues for the quarter ended Dec. 26, 2020 were $111.4 billion, a new record and up 21% from revenues for the quarter ended December 2019. GuruFocus ranks Apple's profitability 9 out of 10 on several positive investing signs, which include a high Piotroski F-score of 7, consistent revenue growth over the past 10 years and profit margins that are outperforming over 94% of global competitors.
Apple returned an annualized 27.44% per year over the past 10 years, outperforming competitor iRobot Corp.'s IRBT return of an annualized 16.10% per year over the past 10 years, according to the new "Performance" section of the stock summary page.
Gurus with large holdings in Apple include Warren Buffett (Trades, Portfolio)'s Berkshire Hathaway Inc. BRK.ABRK.B and Ken Fisher (Trades, Portfolio)'s Fisher Investments.
Alphabet
Class A shares of Alphabet GOOGL traded around $1,905.31, showing that the stock is modestly overvalued based on Monday's price-to-GF Value ratio of 1.29. Class C shares of Alphabet GOOG are likewise overvalued based on Monday's price-to-GF Value ratio of 1.30.
GuruFocus ranks the Mountain View, California-based online search giant's profitability 9 out of 10 on several positive investing signs, which include a five-star business predictability rank and an operating margin that outperforms over 76% of global competitors.
Disclosure: Long Apple and considering buying shares of iRobot.
Read more here:
- New Stock Summary Page Feature: Performance Charts
- 4 Margin-Growing Latin American Stocks Trading Below GF Value
- David Tepper Issues Stark Warning About Speculative Trading
Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.
