What is the Warren Buffett Indicator?

When it comes to investment advisors, one name routinely comes to the top of the list over and over again, Warren Buffett. What is the Warren Buffet Indicator?  His reputation and sound financial advice have led him to be known as one of the most influential investors in the world. He not only talks the talk, but most surely walks the walk, and is on the list of the top five wealthiest people in the world. He has helped many companies to prosper, including his own, Berkshire Hathaway Corporation.

Many financial advisors looked to Warren Buffett's "Buffett Indicator" when making significant investments. This indicator can help them decide if they want to invest in a particular country's stock market.

A country's GDP is the sum of all the goods and services a country has exchanged for a whole year. The Buffett Indicator is a simple system says that if the ratio is too low, the market will get higher, and if too high and it will lower. It is not to be used to forecast a market in a single day or month, but for an entire year.

Simply put, the Buffett Indicator is the ratio of a country's stock market capitalization to the overall GDP of the nation.

Financial advisors use the Warren Buffett Indicator as a tool in their investment toolbox when deciding on which companies to invest in or what products will turn a profit.

Read more on the Warren Buffett Indicator.

Make the REST of your life
the BEST of your life.

For more than 14 years our mission at West Financial Group has been to guide our valued clients to financial security. We strive to address all of your concerns, ensure you understand the products we recommend and take pride in knowing you’re comfortable with the direction and strategy we provide you.

Our goal is to provide a “WOW” experience at every client interaction! We want every meeting, phone call and event to be an interaction worth talking about. We want our clients to be able to say, “WOW, what an experience! I can't wait to tell my friends about our financial professional.”

Whether it’s financial, retirement, legacy planning or optimizing your future wealth, our approach includes understanding your unique situation, exploring your goals and discovering the best way to make the REST of your life, the BEST of your life. By getting to know you and your family, we serve as financial guides who keep your best interests in mind throughout the entire process.

Skip West | Financial Planner | West Financial Group

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