• Education
    • Higher Education
    • Scholarships & Grants
    • Online Learning
    • School Reforms
    • Research & Innovation
  • Lifestyle
    • Travel
    • Food & Drink
    • Fashion & Beauty
    • Home & Living
    • Relationships & Family
  • Technology & Startups
    • Software & Apps
    • Startup Success Stories
    • Startups & Innovations
    • Tech Regulations
    • Venture Capital
    • Artificial Intelligence
    • Cybersecurity
    • Emerging Technologies
    • Gadgets & Devices
    • Industry Analysis
  • About us
  • Contact
  • Advertise with Us
  • Privacy & Policy
Today Headline
  • Home
  • World News
    • Us & Canada
    • Europe
    • Asia
    • Africa
    • Middle East
  • Politics
    • Elections
    • Political Parties
    • Government Policies
    • International Relations
    • Legislative News
  • Business & Finance
    • Market Trends
    • Stock Market
    • Entrepreneurship
    • Corporate News
    • Economic Policies
  • Science & Environment
    • Space Exploration
    • Climate Change
    • Wildlife & Conservation
    • Environmental Policies
    • Medical Research
  • Health
    • Public Health
    • Mental Health
    • Medical Breakthroughs
    • Fitness & Nutrition
    • Pandemic Updates
  • Sports
    • Football
    • Basketball
    • Tennis
    • Olympics
    • Motorsport
  • Entertainment
    • Movies
    • Music
    • TV & Streaming
    • Celebrity News
    • Awards & Festivals
  • Crime & Justice
    • Court Cases
    • Cybercrime
    • Policing
    • Criminal Investigations
    • Legal Reforms
No Result
View All Result
  • Home
  • World News
    • Us & Canada
    • Europe
    • Asia
    • Africa
    • Middle East
  • Politics
    • Elections
    • Political Parties
    • Government Policies
    • International Relations
    • Legislative News
  • Business & Finance
    • Market Trends
    • Stock Market
    • Entrepreneurship
    • Corporate News
    • Economic Policies
  • Science & Environment
    • Space Exploration
    • Climate Change
    • Wildlife & Conservation
    • Environmental Policies
    • Medical Research
  • Health
    • Public Health
    • Mental Health
    • Medical Breakthroughs
    • Fitness & Nutrition
    • Pandemic Updates
  • Sports
    • Football
    • Basketball
    • Tennis
    • Olympics
    • Motorsport
  • Entertainment
    • Movies
    • Music
    • TV & Streaming
    • Celebrity News
    • Awards & Festivals
  • Crime & Justice
    • Court Cases
    • Cybercrime
    • Policing
    • Criminal Investigations
    • Legal Reforms
No Result
View All Result
Today Headline
No Result
View All Result
Home Business & Finance

Should You Buy Stocks After The Recent Market Sell-Off? Here’s What One of Warren Buffett’s Favorite Valuation Gauges Says. todayheadline

April 17, 2025
in Business & Finance
Reading Time: 3 mins read
A A
0
6
SHARES
14
VIEWS
Share on FacebookShare on Twitter


Stocks have whipsawed this year, as weak economic data, high valuations, and issues around tariffs have confused investors. After everything that’s happened in just a few short months, the broader benchmark S&P 500 finds itself down about 9% on the year as I write this, although it’s down much more if you look at highs made in the back half of February. This may leave investors wondering if they should buy the dip after the sell-off.

Many stocks haven’t been this cheap in quite a while, but the saga with tariffs and rising tensions with China makes the environment anything but certain. If you’re looking for answers on whether to invest, you can check one of Warren Buffett’s favorite valuation gauges.

What the Buffett indicator tells investors

Buffett has been investing successfully for decades, and his company, Berkshire Hathaway, has widely outperformed the broader market since 1965. While Buffett and his team have never been afraid to adapt, they are also very disciplined and aren’t going to pour money into stocks when they think the market is overvalued. They also won’t be afraid to buy stocks when there is a market crash. Berkshire made some great investments during the Great Recession and during the early days of the COVID-19 pandemic.

One metric that Buffett came up with has since been dubbed the Buffett indicator, which divides the market cap stocks in the U.S. by the country’s gross domestic product (GDP). A common approach for the United States is to look at the Wilshire 5000, which attempts to measure the market cap of all U.S. equities. In a 2001 Fortune article, Buffett called this indicator “probably the best single measure of where valuations stand at any given moment.”

According to data site longtermtrends.net, the ratio was around 177% as of April 12, down from a peak of over 200% earlier this year, but still above the area where Buffett would find the market attractive. Buffett has previously said that the market is most attractive when the Buffett indicator is in the 70% to 80% range. When the ratio is near 200% or higher, a scenario that occurred right before the dot-com bubble, that indicates a very risky environment.

Still, it’s important to note that the Buffett indicator hasn’t been below 100% since 2013, and the U.S. economy and the stock market have changed significantly over the years. For instance, interest rates were extremely low between 2009 and 2022. Since the Great Recession, the Federal Reserve has also pumped trillions of dollars into the economy through quantitative easing, which many believe has led to assets being inflated.

The Fed also injected trillions into the economy during the worst of the COVID-19 pandemic. While the agency has started to reduce its balance sheet, it’s still quite bloated. Additionally, retail investors have become much more active through digital brokerages, zero-commission trading, and the rise of exchange-traded funds (ETFs), which has increased access and liquidity.

Is now a good time to buy stocks?

If you’re looking at the Buffett indicator through a traditional lens, the popular valuation gauge says that U.S. stocks are still very much overvalued. However, as I pointed out, a lot has changed over the years, and the Buffett indicator hasn’t read below 100% in over a decade. I certainly think there could be more room to fall for stocks in the near term. Uncertainty among investors is still high, and we don’t know how the tariff situation and negotiations between the U.S. and China will play out.

If you feel stressed and would prefer to sit in cash for a bit longer, there’s nothing wrong with that. But I think investors can always buy stocks, as long as they have a long-term investing horizon and understand that volatility could be high in the near term. I’d recommend dollar-cost averaging, where you automatically invest the same amount of money over regular intervals, which helps smooth out the cost basis and ensures you’re not investing based on emotion.

Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.

Tags: BuffettsBuyfavoriteGaugesHeresmarketselloffStockstodayheadlinevaluationWarren
Previous Post

European stocks steady ahead of ECB meeting; rate cut widely expected todayheadline

Next Post

Van de Ven: Spurs want to win UEL for Ange

Related Posts

Florida non-compete agreement bill breaks with recent employment trends

Florida non-compete agreement bill breaks with recent employment trends todayheadline

May 9, 2025
7
Germany's Merz does not rule out EU defence borrowing

Germany's Merz does not rule out EU defence borrowing todayheadline

May 9, 2025
8
Next Post
Copy Link

Van de Ven: Spurs want to win UEL for Ange

  • Trending
  • Comments
  • Latest
Family calls for change after B.C. nurse dies by suicide after attacks on the job

Family calls for change after B.C. nurse dies by suicide after attacks on the job

April 2, 2025
Pioneering 3D printing project shares successes

Product reduces TPH levels to non-hazardous status

November 27, 2024

Hospital Mergers Fail to Deliver Better Care or Lower Costs, Study Finds todayheadline

December 31, 2024

Police ID man who died after Corso Italia fight

December 23, 2024
Harris tells supporters 'never give up' and urges peaceful transfer of power

Harris tells supporters ‘never give up’ and urges peaceful transfer of power

0
Des Moines Man Accused Of Shooting Ex-Girlfriend's Mother

Des Moines Man Accused Of Shooting Ex-Girlfriend’s Mother

0

Trump ‘looks forward’ to White House meeting with Biden

0
Catholic voters were critical to Donald Trump’s blowout victory: ‘Harris snubbed us’

Catholic voters were critical to Donald Trump’s blowout victory: ‘Harris snubbed us’

0

Egg Donor Screening: Medical, Genetic, and Psychological Evaluations in the US Clinics

May 9, 2025
A 10-year-old girl recovering from brain cancer, from the United States was deported with her undocumented parents last month.

Deported family of U.S. citizen girl recovering from rare brain tumor are determined to return

May 9, 2025
Blue state governor touts meeting with CCP official cozying up to Dems

Blue state governor touts meeting with CCP official cozying up to Dems

May 9, 2025
J-10C’s DeepSeek moment? Beijing muted as China cheers fighter jet combat reports

J-10C’s DeepSeek moment? Beijing muted as China cheers fighter jet combat reports

May 9, 2025

Recent News

Egg Donor Screening: Medical, Genetic, and Psychological Evaluations in the US Clinics

May 9, 2025
3
A 10-year-old girl recovering from brain cancer, from the United States was deported with her undocumented parents last month.

Deported family of U.S. citizen girl recovering from rare brain tumor are determined to return

May 9, 2025
2
Blue state governor touts meeting with CCP official cozying up to Dems

Blue state governor touts meeting with CCP official cozying up to Dems

May 9, 2025
3
J-10C’s DeepSeek moment? Beijing muted as China cheers fighter jet combat reports

J-10C’s DeepSeek moment? Beijing muted as China cheers fighter jet combat reports

May 9, 2025
3

TodayHeadline is a dynamic news website dedicated to delivering up-to-date and comprehensive news coverage from around the globe.

Follow Us

Browse by Category

  • Africa
  • Asia
  • Basketball
  • Business & Finance
  • Climate Change
  • Crime & Justice
  • Economic Policies
  • Elections
  • Entertainment
  • Entrepreneurship
  • Environmental Policies
  • Europe
  • Football
  • Gadgets & Devices
  • Health
  • Medical Research
  • Mental Health
  • Middle East
  • Motorsport
  • Olympics
  • Politics
  • Public Health
  • Relationships & Family
  • Science & Environment
  • Software & Apps
  • Space Exploration
  • Sports
  • Stock Market
  • Technology & Startups
  • Tennis
  • Travel
  • Uncategorized
  • Us & Canada
  • Wildlife & Conservation
  • World News

Recent News

Environmental Enforcement Slows Under Trump

Environmental Enforcement Slows Under Trump

May 9, 2025

Egg Donor Screening: Medical, Genetic, and Psychological Evaluations in the US Clinics

May 9, 2025
  • Education
  • Lifestyle
  • Technology & Startups
  • About us
  • Contact
  • Advertise with Us
  • Privacy & Policy

© 2024 Todayheadline.co

Welcome Back!

OR

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In
No Result
View All Result
  • Business & Finance
  • Corporate News
  • Economic Policies
  • Entrepreneurship
  • Market Trends
  • Crime & Justice
  • Court Cases
  • Criminal Investigations
  • Cybercrime
  • Legal Reforms
  • Policing
  • Education
  • Higher Education
  • Online Learning
  • Entertainment
  • Awards & Festivals
  • Celebrity News
  • Movies
  • Music
  • Health
  • Fitness & Nutrition
  • Medical Breakthroughs
  • Mental Health
  • Pandemic Updates
  • Lifestyle
  • Fashion & Beauty
  • Food & Drink
  • Home & Living
  • Politics
  • Elections
  • Government Policies
  • International Relations
  • Legislative News
  • Political Parties
  • Africa
  • Asia
  • Europe
  • Middle East
  • Artificial Intelligence
  • Cybersecurity
  • Emerging Technologies
  • Gadgets & Devices
  • Industry Analysis
  • Basketball
  • Football
  • Motorsport
  • Olympics
  • Climate Change
  • Environmental Policies
  • Medical Research
  • Science & Environment
  • Space Exploration
  • Wildlife & Conservation
  • Sports
  • Tennis
  • Technology & Startups
  • Software & Apps
  • Startup Success Stories
  • Startups & Innovations
  • Tech Regulations
  • Venture Capital
  • Uncategorized
  • World News
  • Us & Canada
  • Public Health
  • Relationships & Family
  • Travel
  • Research & Innovation
  • Scholarships & Grants
  • School Reforms
  • Stock Market
  • TV & Streaming
  • Advertise with Us
  • Privacy & Policy
  • About us
  • Contact

© 2024 Todayheadline.co