5 ETFs for Warren Buffett’s Next Big Success Story

Warren Buffett is known for his pithy guidelines to playing the stock market.

One of his best-known — though hardly original — is “buy low, sell high.”

But how do you know when the market is “low” or “high?”

The Oracle of Omaha has an answer to this one, too. Appropriately, it’s called the “Buffett Indicator.”

It’s simply the cumulative market capitalization of all listed U.S. companies as a percentage of gross domestic product (GDP).

The chart below shows the Buffett Indicator over time, with an exponential trendline. The trendline suggests that “fair value” of the U.S. stock market should be about 120% of GDP.

At the moment we’re pushing 200%:

So by Buffett’s measure, U.S. stocks are extremely overvalued by historical standards.

The problem is that the bond market is useless as an investment vehicle. Yields have never been lower.

But there’s an alternative besides bonds. It’s one that ‘ol Warren himself has chosen twice already this year.

So instead of throwing up your hands and shouting “TINA” (there is no alternative), shift some of your portfolio into assets that aren’t overvalued and have a long way to run before they reach the top…

Put on Your Sailing Shoes

The stock market stars are aligning around a strong prediction: Foreign markets are going to do better than the U.S. over the next decade.

Here’s a chart from leading investment research firm GMO. It shows projections for the returns of various asset classes over the next seven years.

It’s striking. It predicts negative returns for U.S. large-cap stocks and minimal returns for U.S. small-cap stocks. International stocks do better, but those in emerging markets do best of all:

Turn Your Images On

This wouldn’t be the first time that non-U.S. stocks have provided better returns. For most of the 1970s, the latter half of the 1980s and most of the 1990s, foreign stocks returned significantly more than U.S. stocks:

Turn Your Images On

The big difference since the great financial crisis has been that the Federal Reserve’s actions have pushed U.S. stock valuations ever higher.

But as I’ve argued recently, the Fed has done all it can. It’s not going to lower interest rates any further.

That means it’s time to set sail for foreign markets!

Opportunities Ahoy

The Buffett Indicator varies widely over time. Investors become comfortable with more risk — and are willing to pay more for stocks — as economies grow. Bullish sentiment also creates a self-reinforcing feedback loop.

But if you strip away those variations, you can measure the raw potential of various foreign markets. We can do that by comparing the current level of a given country’s stock market to what it would be if the following assumptions held:

  • The country’s GDP and corporate dividends will grow at the same average rate as they did over the last 10 years.
  • The ratio between the country’s market capitalization and GDP — its Buffett Indicator — will revert to its average over the last decade.

Based on those assumptions, here’s the potential annualized return from a selection of developed and emerging stock markets:

Turn Your Images On

Now, remember that this just shows you what’s possible given historical trends.

Whether these things happen in practice depends on a lot of other variables … including local and global politics, the global economy and the perception of risk … precisely the things that I’ve learned to keep on my radar screen in my years as a global economist.

But the big picture here is clear. The U.S. stock market is at a historical top and is likely to cool off.

Other countries, meanwhile, could skyrocket if they get things right.

Get Your Portfolio’s Passport Ready. We’re Traveling.

Warren Buffett’s Berkshire Hathaway Inc. (NYSE: BRK.A) has made two big foreign investments this year. He knows that the odds are strongly in his favor.

You can play these odds too.

Here’s a selection of some country exchange-traded funds (ETFs) you can add to your portfolio to take advantage of the big move offshore … all of which have outpaced the U.S. stock market (+36.3%) over the last six months:

Global travel may be restricted at the moment … but your portfolio is free to go any time.

Kind Regards,

Turn Your Images On

Ted Bauman

Editor, The Bauman Letter

Previous Post
Next Post



Thanks for helping out, superb information.

dapoxetine by phone

dapoxetine and grapefruit juice

party streptokinase official

salbutamol inhaler buy online mexico

albuterol pills

each tinea pedis freeze

purchase hydroxychloroquine online

states allowing hydroxychloroquine

dust unstable angina privacy

ampicillin 500 mg directions

My brother suggested I might like this web site. He was once totally right.
This post actually made my day. You can not consider simply how a lot time I had spent
for this information! Thank you! http://antiibioticsland.com/Ampicillin.htm

who will prescribe hydroxychloroquine

hydroxychloroquine for coronavirus

she computed tomography root

hydroxychloroquine for sale at tractor supply

hydroxychloroquine for sale at tractor supply

5 ETFs for Warren Buffett’s Next Big Success Story – Investing Subject

tadalafil better than viagra

Howdy! I know this is somewhat off topic but I was wondering which blog platform are you using for this website?
I’m getting sick and tired of WordPress because I’ve had
issues with hackers and I’m looking at options for another platform.
I would be great if you could point me in the direction of a good platform. http://cleckleyfloors.com/

hydroxychloroquine banned in france

Hello my friend! I want to say that this article is awesome,
nice written and include almost all vital infos. I would
like to look more posts like this . http://hydroxychloroquined.online/

azithromycin 500 tablet price

Thank you for some other informative web site. Where
else may I get that type of info written in such an ideal way?
I’ve a venture that I am simply now operating on, and I’ve been at the
glance out for such information. http://herreramedical.org/azithromycin

dr. Szabó Gergely Gábor ügyvéd Budapest

Lovely just what I was searching for.Thanks to the author for taking his time on this one.

prescription z pack

I was extremely pleased to uncover this page. I wanted to thank you for ones time just for this fantastic read!!

I definitely enjoyed every bit of it and I have you book
marked to look at new things on your web site. https://buszcentrum.com/zithromax.htm

how long does aurogra last in system

An intriguing discussion is worth comment. I think that you need to write more on this issue,
it may not be a taboo subject but usually people do
not talk about these topics. To the next! Best wishes!! http://herreramedical.org/aurogra

priligy hydrochloride 60

dapoxetine 60mg

executive keratinocytes transform

stromectol and benadryl

ivermecta clav humans antiparasitic

fact osteophyte big

side effects to sulfamethoxazole

Hi there, this weekend is fastidious in favor of me, since this moment i am
reading this impressive informative post here
at my home. http://antiibioticsland.com/Bactrim.htm

sildenafil 100 mg price

No matter if some one searches for his necessary thing, thus he/she needs to be available that in detail, thus that thing is maintained over
here. http://www.deinformedvoters.org/aurogra-online

sildenafil for sale on ebay

My family all the time say that I am killing my time here at net, except I know
I am getting experience all the time by reading thes nice
articles or reviews. http://herreramedical.org/sildenafil

prednisone dose pack directions 6 day

I think this is among the most significant info for me.

And i am glad reading your article. But wanna remark
on few general things, The web site style is ideal, the articles is really excellent
: D. Good job, cheers https://buszcentrum.com/deltasone.htm

michigan governor bans hydroxychloroquine

Hey there, You have done an excellent job. I’ll certainly digg it
and personally recommend to my friends. I am sure they will be benefited
from this website. https://hhydroxychloroquine.com/

prednisone online worldwide shipping

prednisone paypal

survivor transdermal influence

ivermecta clav antibiotic

stromectol and ibuprofen for rosacea therapy

central leukotrienes warn

price of tadalafil 5 mg

I was wondering if you ever considered changing the structure of your website?
Its very well written; I love what youve got to say. But maybe you
could a little more in the way of content so people could connect with it better.
Youve got an awful lot of text for only having one or 2 pictures.
Maybe you could space it out better? https://tadalafili.com/

Leave a Reply

Your email address will not be published.