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Alec Hogg: Buffett Index suggests overheated market
'Interest rates are at record lows assisted by unprecedented money creation by pandemic-panicked governments', writes BizNews founder Alec Hogg.
I love visualcapitalist.com – a website which uses graphics to explain many complex aspects of economic life. The graphic above is a good example of the site's offerings – this one showing how valuations of US shares are now in unchartered territory, supporting growing concerns about asset prices.
The graph illustrates the now famous Buffett Index. Twenty years ago, Berkshire Hathaway's chairman suggested the best way to know if stock markets were under- or over- valued was by tracking the total value of all listed companies against the size of the US economy, its Gross Domestic Product.
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