On Warren Buffett (Trades, Portfolio)’s 88th birthday, the ratio of the Wilshire 5000 market index to U.S. gross domestic product neared its all-time high of 148.5% despite ongoing trade war fears between the U.S. and China.
Dow drops on latest tariff threat
CNBC columnists Fred Imbert and Alexandra Gibbs said the Dow Jones industrial average tumbled 137 points following President Trump’s comments on “moving ahead with additional tariffs on Chinese imports as early as next week.” The Dow closed around 25,986.92, approximately 14 points below 26,000.
Caterpillar Inc. (CAT, Financial), Boeing Co. (BA, Financial) and 3M Co. (MMM, Financial) declined 2.02%, 1.02% and 0.28% from their respective closes on the latest tariff threats.
Buffett indicator nears all-time high despite day’s slump
Despite the broad indexes closing lower for the first time in five trading sessions, Buffett’s favorite market indicator reached 148.1%, approximately 0.4% below its all-time high. The Wilshire 5000 index eclipsed $30.225 trillion, while the U.S. GDP stood around $20.4 trillion. Based on this valuation level, the U.S. stock market is expected to return -2.5% per year over the next eight years.
GuruFocus considers three scenarios for the predicted and actual stock market returns chart: an optimistic case, an expected case and a pessimistic case. The expected annual market return ranges between -10.2% and 2.3% based on predicted market trends over the next eight years.
Disclosure: No positions.
