Saturday , 3 December 2016


Interesting Comparison of U.S. Market-cap-to-GDP Ratio To 20 Other Countries

Two weeks ago, I wrote about Warren Buffett’s favorite tool for measuring the overall valuation of the market: the ratio of total market cap to GDP. Today, we’re going to dig a little deeper into that analysis and compare the U.S. market to 20 other countries you may be interested in investing.

Take a look HERE at a chart showing the current market-cap-to-GDP ratio within the context of its historical range. You will find the results very interesting!

Conclusion: Most European countries look cheap both in comparison to the U.S. market and in comparison to their own historical ranges and Chinese & Japanese stocks are some of the cheapest in the world by this metric.

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Related Articles from the munKNEE.com Vault:

1. Warren Buffett’s Favorite Stock Market Valuation Tool Is Screaming Again

Here’s some perspective on the potential value of the U.S. equity market using Warren Buffett’s favorite valuation metric – total stock market capitalization relative to GDP. Read More »

4. Buffett’s Measure of Stock Market Health, the TMC-to-GNP Ratio, Conveys Concerns

Buffett’s measure – the percentage of total market cap (TMC) relative to the U.S. GNP crossed 100% last week into stretched territory for the first time since 2007 which implies a mere return of around 3.3% annualized (including dividends) over the following years. [This post presents the components of the ratio and the conclusions drawn.] Read More »