2019-08-24 14:38:00 Sat ET
stock market gold oil stock return s&p 500 asset market stabilization asset price fluctuations stocks bonds currencies commodities funds term spreads credit spreads fair value spreads asset investments
Warren Buffett warns that the current cap ratio of U.S. stock market capitalization to real GDP seems to be much higher than the long-run average benchmark. With the current cap ratio of 146.4x, U.S. stock market capitalization represents at least 146 times American national income per year. This current cap ratio exceeds the long-run average benchmark of 80x by more than 80%, and is historically second to the peak of irrational exuberance near 148.5x during the dotcom bubble back in March 2000. From 2018Q3 to 2019Q2, the S&P 500 delivers a 12-month net profit of about $135 per share, and the S&P 500 aggregate share price rises to $3000+ per share. The equivalent S&P 500 P/E ratio thus hovers in the broad range of 22x to 24x. This narrow range well exceeds the long-run average benchmark of 15x to 16x. Long-term stock market capitalization and corporate profitability should move in tandem. If these key metrics stray too far apart, it can be prohibitively expensive for U.S. public corporations to get back to balance.
From this fundamental perspective, the normal stock market forces may pull equity valuation back to the long-run average yardsticks relative to U.S. national income and corporate profitability.
If any of our AYA Analytica financial health memos (FHM), blog posts, ebooks, newsletters, and notifications etc, or any other form of online content curation, involves potential copyright concerns, please feel free to contact us at service@ayafintech.network so that we can remove relevant content in response to any such request within a reasonable time frame.
2020-01-15 08:31:00 Wednesday ET

Anti-competitive corporate practices may stifle U.S. innovation. In recent decades, wage growth, economic output, and productivity tend to stagnate as U.S.
2020-05-05 09:31:00 Tuesday ET

Our fintech finbuzz analytic report shines fresh light on the fundamental prospects of U.S. tech titans Facebook, Apple, Microsoft, Google, and Amazon (F.A.
2017-02-07 07:47:00 Tuesday ET

With prescient clairvoyance, Bill Gates predicted the recent sustainable rise of Netflix and Facebook during a Playboy interview back in 1994. He said th
2023-03-07 11:29:00 Tuesday ET

Former Bank of England Governor Mervyn King provides his deep substantive analysis of the Global Financial Crisis of 2008-2009. Mervyn King (2017) &nb
2019-12-01 10:31:00 Sunday ET

Goop Founder and CEO Gwyneth Paltrow serves as a great inspiration for female entrepreneurs. Paltrow designs Goop as an online newsletter, and this newslett
2017-03-21 09:37:00 Tuesday ET

Trump and Xi meet in the most important summit on earth this year. Trump has promised to retaliate against China's currency misalignment, steel trade