Financial 15 Split Corp T.FTN

Some Warning Signs

[Experienced]

In my past post, I mentioned my concerns over the fact that the market sentiment indicator has been stuck in the Greed and Excessive Greed range for the past few weeks.  This is usually a signal that the market is getting overheated.  Sooner or later the last person desperate to get in will have spent all their money and the number of buyers declines and the market retreats due to a lack of buyers.

The other worriesome indicator is the so-called Buffet indicator.  Buffet has often said that this indicator is the one that he relies on since it is the most accurate.

So what is it ?

His indicator is to take the Wilshire 5000 which is the broadest market index and compare the valuation of those stocks to US GNP.  In simple terms it measure the value of all the stocks against the size of the US economy.  For Buffet, a reading of 100% is OK and a reading of 70% or lower suggests that there are bargains out there.

What is the current value of this comparison?

Ready???

190%!!!!


Something to think about when making investment decisions.

[mouserman]

Yes certainly some of the valuations seem outrageous, particularly in the AI space.. Valuations of banks dont seem to be too far above the norm.... but there are a LOT of liabilities for loans that SHOULD concern the banks..

[Richou77]

I agree with you Mouse, bank are not too high right now.  I think they are concerned about PCL (Provisions for credit losses) For example, RBC increased their PCL every quarter.  They have close to 2 billions in PCL.  And when the rates will go down, it will reduce the pressure. Thanks for your time to let us know the NAV every day!

[NobleHouse]

I can't speak for the US banks with their wild west investing and regulation world , but my take is a decline in interest rates by the Fed and BOC intent on damaging our economies will abate and ease these provision concerns.As in the past , all those who subscribe to panic then sell up and put your money in the Prefs , recommended more than once , or just exit completely and perhaps invest in

[Experienced]

NobleHouse.....don't disagree with your points and in fact I have posted a number of times that I see banks as being beneficiaries of AI in terms of efficiency.   My point in my previous point is that there are some accurate and key indicators out there that suggest that a correction is coming and that market valuations are too high. In such a scenario, bank stock share prices will go