Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
I don't think that this ratio comparing total U.S. market cap to GDP has been posted on here, at least for awhile. My apologies if it has recently been posted. This article is from Jan. 11.
- The Buffett Indicator is reaching historic levels, both in absolute and relative terms - Its current reading of 230% is far beyond any peak level we've seen - All three previous instances of the Buffet Indicator getting this stretched were followed by declines of at least 25%
• Do you believe that the present administration has the slightest idea where their various interests and beliefs are going to take the general economy? @Mark, quoting Paul Krugman in another post: "ETTD: everything Trump touches dies."
@JD_co, in another post, notes that: "A loser with 6 bankruptcies who has left a trail of destruction in his wake at every turn is steering us off a cliff."
• Do you believe that anyone really has any idea where the evolution of AI is going to take the general economy?
• Is your present financial situation such that you could be comfortable with it's present value?
• Is your present financial situation such that it would be reasonably resistant to a major financial decline?
• If not, is there a value that would be acceptable if you were to lock in some percentage of your present gains?
We also are experiencing a cluster of Hindenburgs:
the Hindenburg Omen signal is that during a normal uptrend, there should be more stocks making New Highs than making New Lows. That is the normal condition. If you get a condition where the uptrend is still underway, but the numbers of New Lows start perking up, then that is a sign of trouble. What constitutes "perking up"? That's a matter for opinion, and perhaps back-testing, but Miekka set his threshold at both NH and NL being greater than 2.8% of Advances plus Declines on the same day. Other analysts might choose a different criterion, which people are perfectly allowed to do. But for the sake of consistency, and so as to avoid confusion, I stick with Miekka's criteria.
A single signal is interesting, but the message gets more compelling when we see clusters of multiple signals in a short time frame. We had a grouping of 5 signals from Oct. 29 to Nov. 13, 2025, but the market shrugged. Now we have 3 more (so far) and would have had a 4th on Feb. 4, 2026 except that the NYSE's McClellan A-D Oscillator was just barely positive that day.
@Old_Joe, great questions that every investors should pay attention to ?
Edits:. My approach to OJ questions is the following : 1. Invest a sizable bond allocation so to counteract the equity risk. Recently Vanguard recommended 40/60 stock/bond allocation instead of the traditional 60/40. 2. See recent tread on “to go bonds” 3. Diversify across the globe and there are many choices (and inexpensive index funds) to do so. The evolving politics may shift the mindset for many investors. 4. It is okay to hold cash for future buying opportunities.
@Old_Joe I agree completely. Many signals are emerging, layoffs, job numbers, multiple indicators, debt growth, calls for lower rates. It is not just one or two things.
It would be absolutely cultish, for anyone to believe there is method to the madness. The economy (and stock market) are far too complex to make changes and know what the outcome will be. Playing Jenga with tariffs and trade structures cannot be predicted. We have already seen how this administration has misjudged China, Canada and Europe's reaction to their heavy handedness. The flow of funds away from U.S. equities is merely one of the unintended consequences.
Had anyone predicted that would happen, the true believers would have disagreed vehemently. Yet, here we are. The architects said that the stated goal was to bring back manufacturing jobs, the opposite seems to be happening. What actually seems to be underway is an AI-enabled push for automation that will make the desired blue-collar jobs even less likely.
Another investing thread that got derailed by OJ and his TDS. So, thank you very much OJ.
The Buffett Indicator, like most single metrics, is not very reliable, which is why I largely ignore it. Instead, pay attention to what the markets are actually telling you and invest accordingly.
Examples: * International stocks and bonds have been leading for months. * SCHD: I liked it for years, then it struggled for about three years (2023–2025), which I posted about at the time. Year-to-date, it’s been performing very well again.
Comments
To lock in gains or let it ride is the question!
"ETTD: everything Trump touches dies."
@JD_co, in another post, notes that: "A loser with 6 bankruptcies who has left a trail of destruction in his wake at every turn is steering us off a cliff."
• Do you believe that anyone really has any idea where the evolution of AI is going to take the general economy?
• Is your present financial situation such that you could be comfortable with it's present value?
• Is your present financial situation such that it would be reasonably resistant to a major financial decline?
• If not, is there a value that would be acceptable if you were to lock in some percentage of your present gains?
Edits:. My approach to OJ questions is the following :
1. Invest a sizable bond allocation so to counteract the equity risk. Recently Vanguard recommended 40/60 stock/bond allocation instead of the traditional 60/40.
2. See recent tread on “to go bonds”
3. Diversify across the globe and there are many choices (and inexpensive index funds) to do so. The evolving politics may shift the mindset for many investors.
4. It is okay to hold cash for future buying opportunities.
It would be absolutely cultish, for anyone to believe there is method to the madness. The economy (and stock market) are far too complex to make changes and know what the outcome will be. Playing Jenga with tariffs and trade structures cannot be predicted. We have already seen how this administration has misjudged China, Canada and Europe's reaction to their heavy handedness. The flow of funds away from U.S. equities is merely one of the unintended consequences.
Had anyone predicted that would happen, the true believers would have disagreed vehemently. Yet, here we are. The architects said that the stated goal was to bring back manufacturing jobs, the opposite seems to be happening. What actually seems to be underway is an AI-enabled push for automation that will make the desired blue-collar jobs even less likely.
The Buffett Indicator, like most single metrics, is not very reliable, which is why I largely ignore it. Instead, pay attention to what the markets are actually telling you and invest accordingly.
Examples:
* International stocks and bonds have been leading for months.
* SCHD: I liked it for years, then it struggled for about three years (2023–2025), which I posted about at the time. Year-to-date, it’s been performing very well again.
Who suffers more from 'TDS' -- the poster or the poster that alleges it ....?
pay attention to what the markets are actually telling you and invest accordingly.
On that, I (gasp!) agree with you 100%.