On Thursday, the day before Good Friday and the Easter holiday weekend, Warren Buffett (Trades, Portfolio)’s market indicator reached 143.5%, approximately 4.5% higher than its April 1 reading of 139.2% and 5% lower than the all-time high of 148.5% set around March 30, 2000.
In observance of the holiday weekend, the New York Stock Exchange was closed on Friday. Meanwhile, Asian markets like Japan, China and South Korea traded higher on the heels of strong news from tech companies.
Asian markets spring forward ahead of Easter weekend
The Nikkei 225 Index advanced 0.5% to 22,090.12, driven primarily by gains from technology companies. CNBC columnist Saheli Roy Choudhury said early Friday morning that shares of Nintendo Co. Ltd. (NTDOY, Financial)(TSE:7974, Financial), owner of popular franchises like Super Mario, Pokémon and Zelda, jumped over 12% on news that Chinese social media giant Tencent Holdings Ltd. (TCEHY, Financial)(HKSE:00700) won approval to sell the Nintendo Switch game console in China, “one of the largest video game markets in the world” according to Reuters.
The Chinese markets also advanced: The Shanghai Index rose 0.63% to 3,270.80 while the Shenzhen Index rose 0.93% to 1,778.81.
Buffett’s top holdings remain overvalued
The Berkshire Hathaway Inc. (BRK.A, Financial)(BRK.B, Financial) CEO’s favorite market indicator considers the ratio of the Wilshire 5000 full-cap price index to the U.S. gross domestic product. As of Friday, the total market cap is 1.435 times greater than the U.S. GDP, suggesting significant overvaluation. Based on the current market level, the U.S. market is expected to return -2.1% over the next eight years.
Figure 1 illustrates the predicted and actual returns of the U.S. market since 1970. According to the chart, the predicted returns can range between -9.80% in the most-pessimistic case and 2.70% in the most-optimistic case.
Figure 1
Berkshire’s top holding, Apple Inc. (AAPL, Financial), closed at $203.86 on Thursday, approximately 10% above its median price-sales value of $184.62 and approximately 12.68% off its 52-week high of $233.47. Buffett’s conglomerate also has bank holdings where the stock is trading near 10-year highs, including Bank of America Corp. (BAC, Financial) and JPMorgan Chase & Co. (JPM, Financial).
Value screeners identify opportunities around the world
Even though the U.S. market remains significantly overvalued, investors can still find good value opportunities across global exchanges. Table 1 lists the value screener record as of Friday.
| Screener | USA | Canada | UK | Europe | Asia | Oceania | Latin America | Africa | India |
| Graham Net-Net | 231 | 57 | 53 | 252 | 616 | 9 | 8 | 12 | 40 |
| Undervalued Predictable | 58 | 6 | 43 | 113 | 66 | 8 | 45 | 6 | 12 |
| Buffett-Munger | 34 | 4 | 26 | 72 | 89 | 2 | 24 | 3 | 44 |
| Peter Lynch PE | 31 | 1 | 14 | 43 | 53 | 0 | 7 | 3 | 8 |
| Peter Lynch PS | 104 | 7 | 36 | 115 | 75 | 8 | 28 | 24 | 39 |
| Peter Lynch PB | 162 | 24 | 57 | 170 | 109 | 7 | 35 | 24 | 58 |
| Lynch p2ebitda | 197 | 8 | 49 | 193 | 112 | 7 | 16 | 17 | 47 |
| Hist Low PS | 30 | 2 | 16 | 51 | 46 | 0 | 20 | 4 | 27 |
| Hist Low PB | 51 | 2 | 27 | 64 | 53 | 2 | 26 | 9 | 23 |
| High Div Yield | 53 | 5 | 8 | 96 | 42 | 14 | 20 | 7 | 6 |
| Magic Formula | 4709 | 551 | 2181 | 6956 | 13418 | 578 | 1088 | 383 | 3461 |
| 52-week Low | 865 | 110 | 309 | 1123 | 2156 | 92 | 343 | 147 | 800 |
| 52-week High | 2042 | 254 | 1042 | 3028 | 2543 | 191 | 520 | 99 | 501 |
| 3-year Low | 375 | 62 | 142 | 540 | 1075 | 38 | 140 | 65 | 488 |
| 3-year High | 1475 | 153 | 761 | 2088 | 951 | 135 | 427 | 65 | 276 |
| 5-year Low | 255 | 34 | 108 | 356 | 738 | 22 | 83 | 54 | 315 |
| 5-year High | 1318 | 140 | 722 | 1925 | 713 | 125 | 401 | 52 | 257 |
Table 1
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Disclosure: No positions.
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