Warren Buffett Predictions for 2018

Looking at the current market conditions, US stock market is poised for a great crash of 2018 & in addition to this a legendary investor Warren Buffett has his take on the current market condition. The Warren Buffett Indicator is less mysterious than it sounds. It might as well be called the common-sense indicator. It’s simply the relationship between gross domestic product (GDP)—or the sum total of a country’s economic activity—and the value of stocks in the S&P 500. So, in simpler terms, the Warren Buffett Indicator in terms of Wall Street measures market capitalization versus U.S. GDP. If we believe warren buffett predictions a stock market crash in 2018 is meant to happen.

Comments

  • edited December 2017
    Did people in 2008 also forecasted a crash? People on forums and such?
  • I think people in 2008 also forecasted a crash...there is always the same people forecasting a crash....they just always predict it will happen 2 years later...so if it happens in 1 year they still got it and if not they have 2 years to marketing themselves...2 years is the prefect number...

    I predict in 2019 there will be a huge market crash...mark my words...
  • As Investor77 points out, most of the forecasters keep making the same prediction which eventually comes true.

    One guy who I think actually seems to have a good idea what is going on is Professor Steve Keen, he has presented compelling empirical evidence that the primary driver for economic growth is private debt and that when the level and rate of change in growth of private debt exceeds a certain limit relative to GDP then an economic contraction generally occurs.

    These videos cover his research quite well;






    He is warning that China, S. Korea, Canada, Australia, Sweden, Hong Kong and Belgium are currently the most at risk due to levels of and rate of growth in private debt. Incidentally, he began warning of problems brewing with the US, UK and Europe in 2005 based upon his research and the countries he listed were the worst effected by the 2008 financial crisis. He asserts that it is a mistake to focus on public debt and that the most important indicator to look at is private debt levels and rate of growth relative to GDP.

    Regards,

    David

  • edited December 2017
    Here is a quote from that Lombardi Letter,

    “..Only unbridled, and most likely irresponsible, euphoria has been driving the Dow to exceed 23,300 points in these last few weeks of 2017. According to Buffett’s motto, a majority of investors are all but fearful. They are positively ravenous with greed. Therefore, this is no time for the wise to be betting their savings in the stock market...”.

    The instructive think here is that theDow is 10% higher than it was in October, when this article was written..That is a years worth of average growth, that will take a lot of out performance in the future to get back to market return.

    I don’t know why anyone wants to make investing so complicated.

    It is as simple as looking at a long term chart of the SP500. You will notice it slopes from lower left to upper right. What else do you need to know?
  • 'It is as simple as looking at a long term chart of the SP500. You will notice it slopes from lower left to upper right. What else do you need to know?'

    No, it's really not that simple.

    Imagine you are investing in the index in 1929, you put your capital to work and then september rolls around, you see the value of your investment start to fall. By July of 1932 your investment has lost 89% of its value. Assuming you haven't panicked and sold at a loss it takes 22 years, till 1954, for you to get back to break even point.

    If you are young with 50+ years ahead of you and pay regular small amounts into an index fund throughout your life then you may end up with a 9% annualized return but an event like the 1929 crash can really put a dent in long-term performance. You'll get a much better performace by value weighting your investments, investing more when the market is undervalued and less when it is overvalued. This applies to individual securities and the market in aggregate.

    Regards,

    David
  • @David

    Great video! Do you know if you can simulate where the economies are right now? The first video stops in 2015 and I would like to see where my country is right now (the netherlands)

    kind regards,
    Tim
  • edited December 2017
    David,

    “You'll get a much better performace by value weighting your investments, investing more when the market is undervalued and less when it is overvalued. This applies to individual securities and the market in aggregate.”

    Can you point me to data that shows this?

    If you are timing the market, are you all out at this time?
  • So if the market is going to crash, what do we invest in?
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