Buffett’s favorite valuation metric
Note to reader: When compared to the past 50 years, equities may seem superficially expensive, but we have to consider that fewer publicly traded corporations comprise an ever larger percentage of overall economic activity than in the past. For instance, the once fragmented retail sector is now effectively controlled by three firms (Walmart, Costco, and Amazon). Moreover, most of the firms whose stocks comprise the S&P 500 have a much larger global footprint than in the past. Thus, profitability has increased over time and demonstrates another aspect of the consolidation of wealth.
A key valuation metric touted by legendary investor Warren Buffett is signaling that equities are relatively cheap, bolstering the case that the sizzling rebound in US stocks has room to run.
The “Buffett Indicator” measures the ratio of the total value of the US stock market via the Wilshire 5000 Index divided by the dollar value of US gross domestic product. It stands at its lowest level since early September — even after a bounce that has sent stocks screaming higher in recent weeks.
The 94-year-old chief executive of Berkshire Hathaway, which will hold its annual meeting in Omaha, Nebraska, this weekend, has said the “single best measure of where valuations stand” was the ratio of the value of US publicly traded companies to the country’s GDP.
The indicator blared a warning late last year when it shot to a historic high, echoing similar signals sent during market peaks in 2021 and before the bursting of the dot-com bubble in 2000.
The measure is now at 180%, around where it stood after an unwind of the Japanese yen carry trade sparked a brief but intense selloff last year. That stock-market rout cleared the path for a powerful S&P 500 rally in the closing months of 2024.
Long live the asset owners! Viva la asset owners! Long live the landlord!
Remember, renters and wage slaves, Tuesdays are Soylent Green days.
All Car Sales (Apr)
Act: 2.89M Cons: Prev: 3.16M
Durables Excluding Defense (MoM) (Mar)
Act: 10.5% Cons: Prev: 10.4%
Durables Excluding Transport (MoM) (Mar)
Act: 0.0% Cons: Prev: 0.0%
Factory Orders (MoM) (Mar)
Act: 4.3% Cons: 4.4% Prev: 0.5%
Factory orders ex transportation (MoM) (Mar)
Act: -0.2% Cons: 0.3% Prev: 0.3%
Oh Stone, you sound like such an arrogant scumbag!
I’m listing my last PGC condo next month for sale. It’s my 6th and final one. I still have several detached houses in the county, however.
Getting out of ghetto town. By facilitating a tax-free exchange I shield over 180k from cap gain tax liability. That’s how I stick it to the Maryland multicultural taxman.
The proceeds will come back to Virginia and will go to a nice detached single family house that will cash flow incredibly well with minimal government interference. Better tenants, better peace of mind.
Shenandoah County recently reverted two of their high schools names back to General Lee and Stonewall Jackson. After the BLM riots, which coerced the schvartzes-loving rioters to tear down Confederate statues, Shenandoah County changed the names of two of their high schools. About a year ago, they said screw this and change them back. The Virginia chapter of the NAACP sued, but it didn’t go anywhere. That’s the jurisdiction I want to own.
As a couple of my former readers would say, Oh Stone, you’re such a know-it-all scumbag!
I would assume they belong to organized religions and are gammas and omegas on the social hierarchy.
Former, is the key word in that sentence!
How has navigating real estate listings been for you? Have you had any hassle with all the NAR changes? I feel like anytime I want to see a property they want me to sign contracts now regardless if I say I am a customer or a client.
I haven’t had any issues so far. While I have not been actively searching for a new purchase in at least 6 months, I can’t imagine any listing agent shooting me down. But, I could be wrong. I have gotten agents who are uncomfortable with the dynamic of me representing myself, but ultimately, they relented as they saw my potential transaction as a clean one
You explained how you facilitated a tax-free exchange before can you fill us in again on the process? Probably different for each State, or maybe not?
Each state conforms with Federal tax IRC. It’s technically called a 1031 exchange and all the states allow for them. As long as an investor abides by the Feds, the State will as well.
There are extra steps an investor must take in some states if the property is owned by an out of state owner or by a foreign entity (outside of the state of the subject property). In that case, states require pre-approval by their state tax agency. It requires a form with the 1031 exchange facilitator submitting it.
It’s typically a perfunctory matter. The tax agency will normally approve it, but the state will run a tax check to make certain there are no state specific back taxes or liens owed by the out of state owner.
Many LLCs in which the property is held are domestic LLCs, meaning they are incorporated in that state. Thus, they are considered residents of that state, even if the owner of that LLC resides in another state.
For instance, even though I am a resident of VA, this condo I’m selling is held in a MD LLC. Thus, I don’t need pre-approval from MD Tax. If I held it in my name or in a VA LLC, I would need pre-approval or else MD would require title to withhold as much as 8.25% at the closing table. I would then have to petition for the money to be returned.
Other than that, all states abide by the Federal IRC guidelines.
Stone, have you paid any attention to the Shiloh Hendricks story? It looks like white people are paying more attention and getting sick and tired of the darkies harassing them.
Yeah. Most Caucasian Americans say nigger anyway. I find the orientals despise blacks even more than we do. They truly are a curse to society. Imagine a country without all of those blacks. It would be paradise.
That was what was originally intended at Creation! Adamic Man!
The play book of the synagogue is posted in Matthew 24!
The child she issued the slur against was Somoli. Nobody likes Somolis. They are major perpetrators of fraud in the state of Minnesota.
Right! Look at Ihlan Ohmar!
Employment data look excellent all around. Earnings are a little light, but overall, excellent data. Bonds selling off immediately on the news. The equities like it and these numbers refute all of the layoffs in government. Government payrolls actually increased. Headline revisions also moved up….
Average Hourly Earnings (YoY) (YoY) (Apr)
Act: 3.8% Cons: 3.9% Prev: 3.8%
Average Hourly Earnings (MoM) (Apr)
Act: 0.2% Cons: 0.3% Prev: 0.3%
Average Weekly Hours (Apr)
Act: 34.3 Cons: 34.2 Prev: 34.3
Government Payrolls (Apr)
Act: 10.0K Cons: 5k Prev: 15.0K
Manufacturing Payrolls (Apr)
Act: -1K Cons: -5K Prev: 3K
Nonfarm Payrolls (Apr)
Act: 177K Cons: 138K Prev: 185K
Participation Rate (Apr)
Act: 62.6% Cons: 62.5% Prev: 62.5%
Private Nonfarm Payrolls (Apr)
Act: 167K Cons: 124K Prev: 170K
U6 Unemployment Rate (Apr)
Act: 7.8% Cons: Prev: 7.9%
Unemployment Rate (Apr)
Act: 4.2% Cons: 4.2% Prev: 4.2%
The BLS household survey looks excellent as well.
While the civilian labor force rose by 518k, which is a large uptick, the number of employed climbed by 436k. Overall, this points to a much better picture than many feared.
The labor participation rate also climbed to 62.6%, coming in a tick higher than the consensus.
Because of the large uptick in the civilian labor force, the unemployment rate stays the same at 4.2%.
The Establishment and household surveys both point to a good picture this month.
https://www.bls.gov/news.release/empsit.a.htm
From this morning’s Seeking Alpha
Wall Street has now recovered nearly all the losses seen since “Liberation Day,” but the Federal Reserve’s job is getting a lot harder. The “data-dependent” central bank may have a hard time parsing through recent economic data before it meets next week, given the negative GDP reading that wasn’t really negative and hot inflation data that might not have been all that fiery. Next up is the potentially market-moving nonfarm payrolls report, which will be published today at 8:30 AM ET.
Snapshot: The average estimate of economists sees 130K added to U.S. payrolls, down from the 228K increase in March. Investors will also be looking at whether the March figure is revised lower, given that last month’s report came in much stronger than expected. The unemployment rate, though, is expected to remain at 4.2%, still near historic lows, while average hourly earnings are expected to rise 0.3% M/M, the same rate as in March. On a year-over-year basis, that translates to a 3.9% increase, up from 3.8% in the prior month.
Don’t make any big bets on market direction. If the numbers come in weak, that would be a bad sign for the economy, and stocks could head south on the news. Alternatively, it might mean the Fed could be more inclined to step in sooner, and equities could rally on the hope of rate cuts. The same equations can occur if the numbers come in stronger than expected, so it’s not a good idea to wager too much on the outcome of today’s report.
SA commentary: “The current labor market can be best described as a low-hire-low-fire market,” writes SA analyst Damir Tokic. “It seems that the labor market is still not weak enough to point to an imminent recession, given that companies are still reluctant to let go of their employees. This likely has to do with a chronic U.S. labor shortage, especially due to the currently stricter immigration policy. Thus, it is likely that the non-farm labor jobs for April remain positive. However, the question is whether new jobs are still being created, in aggregate.”
Factories key to the US’s industrial ambitions are asking for tariff relief to import machinery from China they say they need to set up or expand their US manufacturing facilities.
•In theory, these firms would eventually offer precisely the production boost that Trump has billed as the ultimate goal of his tariffs. In the meantime, they’re being put off by increased costs and economic uncertainty.
•More than 180 companies have filed more than 1,100 individual requests in recent months for tariff exclusions, pleading their case for Chinese-made machinery.
•Applicants range from the likes of Ford and Hitachi to relative minnows such as an Ohio company that sells industrial sewing machines used to make leather items, including custom saddles for jockeys in this weekend’s Kentucky Derby.