-Based on the current “Buffett Indicator,” the bubble collapse of the U.S. stock market is on the countdown. –

The Buffett Index was created in 2001 by investment guru Warren Buffett, which is a criterion for determining whether the U.S. stock market is overvalued or undervalued.

The Buffett Index refers to “a country’s total market cap (TMC) divided by GDP.”

In other words, it can be expressed in the following way.

It can be expressed as “R(Buffit Index) = Market cap/GDP”,

“R<50%”, “Significantly Undervalued”,

“50%<R<75%”, “Modestly Undervalued”,

If “75%<R<90%”, “Fair Valued”,

“90%<R<115%”, “Modestly Overvalued”,

If “115%<R”, it is “Significantly Overvalued”.

In other words, the basis of the Buffett index can be classified into undervalued and overvalued depending on how much a country’s GDP is.

In addition, the most desirable is “market total = GDP”, which is the “appropriate price” without bubbles in the stock market’s stock price.

Then, the most recent data, “Total Market Cap (TMC)/GDP” in the United States on June 24, 2024 (local time), is “192.2%” (see attachment).

In other words, if the Buffett index is “115%<R”, it is “Significantly Overvalued”, and the current US stock market is in a “Hyper Overvalued” state with “R=192.2%”.

In a nutshell, the stock price of all stocks in the United States now has almost a “huge bubble,” and it has to fall “60%” from the current U.S. stock price to be called an “appropriate stock price.”

So what’s causing such a huge bubble in U.S. stock prices?

That was first, the failure of the Fed’s monetary policy, which provided astronomical liquidity,

The second is the recent “AI Bubble,” which is due to the surge in the Nasdaq, which is centered on technology stocks.

In short, the current U.S. stock market is full of bubbles, such as “asset bubbles due to liquidity bubbles” and “artificial intelligence bubbles.”

Here we must listen carefully to “Pierre-Olivier Gourinchas,” the IMF’s chief economist.

April 11, 2023 (Reuters) – “Pierre-Olivier Gourinchas,” the IMF’s chief economist, said in a conversation with CNBC.

“Banks are facing higher costs and losses on some assets, putting them in a “more precarious situation” and potentially leading to a pull-back in lending, IMF Chief Economist Pierre-Olivier Gourinchas told CNBC”.
In other words, “banks face higher costs and losses on some assets, putting them in a “more precarious situation.” It is saying this could potentially lead to a reduction in loans for banks.”

In other words, banks in crisis go into “Financial Construction,” which leads to “Pull-Back in Lending,” which leads to companies and governments “Fiscal Construction,” which leads to lower consumption, lower investment, lower production, and lower employment, which pose risks to global GDP growth.

To sum this up, the U.S. stock market is now overvalued, with “asset bubbles due to liquidity bubbles” and “artificial intelligence bubbles,” but with reduced GDP, it has become overvalued.

Then, let’s analyze the past “Buffett Indicator” and the current “Buffett Indicator” in detail.

On September 30, 2022, the “Buffet Indicator” was 137.90%, and as of June 24, 2024, the current “Buffet Indicator” is soaring to “192.2%”.

In nearly 21 months, the “Buffett Indicator” has skyrocketed 54.3%.

So when did the “Buffett Indicator” soar at its highest?

That’s because the “Buffett Indicator” was “199.50%” on August 30, 2021, and the “Buffett Indicator” has since plummeted to “137.90%” on September 30, 2022 (see attachment).

In other words, the “Buffett Indicator” has plunged for 13 consecutive months to “61.6%” (see attached).

However, the “Buffett Indicator” on June 24, 2024 (local time) was “192.2%”.

Therefore, according to his analysis, the bubble collapse of the U.S. stock market has entered a countdown based on the current “Buffett Indicator.”

In other words, I believe that there is a high possibility that the stock price of the US stock market will plunge in the near future.

For example, on Aug. 30, 2021, when the “Buffett Indicator” was at its peak of 199.50%, the Dow was at “35,369.09P,” and when it plunged to “137.90%” on Sept. 30, 2022, the Dow plunged to “28,725.51P.”

In other words, the Dow plunged “6,643.58P” in about 13 months.

Not only that.

Now