You may have heard by now. The so called, "Buffett Indicator" is flashing what we're being told are "warning signals" of an imminent market collapse.
It is the "Buffett Indicator" after all. And Warren Buffett is one of the all-time greats.
But let me fill you in on a little secret. The only people who actually care about this ridiculous excuse for a "market gauge" are journalists writing their glorified gossip columns and charlatans trying to do their best to scare you.
That's it.
They claim that the "Buffett Indicator" is this magical signal based on a ratio between the total market-cap of U.S. stocks relative to U.S. GDP.
It's so hilarious that even Charlie Munger came out and said that,"Just because Warren thought of something 20 years ago doesn't make it a law of nature. There is no natural correlation between GDP & Corporate Profits"
The "Buffett Indicator" is not a thing. Not even the guy who it's named after thinks it's relevant.
Meanwhile, here's a chart of Berkshire Hathaway chugging along in a strong uptrend making higher highs and higher lows.
But then why does Berkshire have so much cash? Doesn't that mean the market is going to crash.
Again, that's what the journalists want to write about. They think it's going to attract readers, no matter how much it hurts them. It's also exactly what the permabears want you to believe.
But nope.
Once again, Warren's high cash levels are historically great buying opportunities.
The last time Berkshire had this high percentage cash in its portfolio, the stock market immediately went on to have the greatest 52-weeks in American history. The time before that, the bull market in stocks lasted for 3 more years. The lowest percentage cash he's had at any time over the past decade is right when the S&P500 peaked at the end of 2021.
You're welcome to sell all your stocks. But I would encourage you to have better reasons to do that than a made up indicator that Uncle Warren doesn't even care about. His cash levels are a poor excuse for selling stocks as well, they have been for several quarters now...
I'll tell you when it's time to be running to cash. And it certainly hasn't been over the past couple of years. Any dip has been an opportunity to buy. One day that will change. And I'll be right here talking about it.
The timing of that bearish approach and the trades we'll be putting on to profit from such a decline will be LIVE on our Rangefinder App available for all Premium Members of ASC Research.
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