AndreaGrey

Is the market Cheap!

Short
SPCFD:SPX   S&P 500 Index
Hi everyone,
Know doubt you've looked at a lot of charts recently that make it fairly we are in a period of uncertainty, to say the least. There are a lot of people out there trying to call the bottom and convince others that they should start buying now because the prices are so cheap. While I do agree that the next few years will be one of the best times in decades to buy stocks for the long run, now may not be the time just yet. Today I'm posting a chart (link below) that gives you a look at the market cap to GDP. This can be helpful when deciding to buy into the market after there has been a correction. To put it another way, when will the "market store" have a clearance sale. Without going into too much detail you can see from the chart in the link that the market cap to GDP or the price of businesses in relation to the profitability of the nation is still much higher than the average. The question I ask myself is: Can we turn around and continue to climb further away from the mean for a while longer or is this going to be the time for us to move back to the mean (hopefully not lower) and position for the next bull run? I'll leave that up to you to decide.
Next time I want to post a chart and discuss historical market trends and why I think that when things recover we will likely see the buying opportunity of a lifetime very soon. Also, keep in mind that this discussion is about the broader market and not individual stocks. Currently, there could be some great opportunities to buy individual names that are way undervalued.
https://www.longtermtrends.net/market-cap-to-gdp/

Thanks again for reading my post and happy trading,
Andrea

Comments

GDP should by pretty ugly this quarter, but GDP you using still Q4/2019. Actually right now Market Cap to GDP ratio should be ATH, next quarter is probably even worse.
+1 Reply
Cash is the safest option.
+1 Reply
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