Correlation or Coincidence? Legendary investor Warren Buffett’s favorite metric of stock valuations is currently suggesting that a stock market setback could be coming.
Tag Archives: GDP
Don’t Compare Stocks to GDP. The real issue here is that investors should care little about GDP. No one buys shares of GDP. Investors buy shares of companies, and profits are proof that productivity is strong in the private sector. Government distorts the picture, showing both a secular stagnation and “bubble” that don’t really exist.
New Policies, New Path. In this environment, as markets reassess what’s possible, we may have more days like Friday in the equity market. But more economic growth will ultimately be a tailwind for equities, not a headwind. Stock market investors who can’t take a one-day 2.1% drop in equities, or even a 10% correction, shouldn’t be in the stock market to begin with. Those who can remain calm and stay invested will be rewarded.
Longest Recovery Ever, Almost. Notice how we didn’t say it’ll be the “best” expansion of all-time, just the longest; it’s not the best by a long shot. From the recession bottom to the expansion peak, real GDP expanded 39% in the 1980s and 43% in the 1990s. So far, eight years in, this one is only up 19%. That’s why we’ve been calling it the Plow Horse Economy.
Third Quarter Real GDP…3.8%! The Atlanta Fed’s “GDP Now” model, which tracks and estimates real GDP growth, says the economy is expanding at a 3.8% annual rate in Q3. If correct, that would be the fastest pace for any quarter since 2014.