By Peter Garnry
Yesterday, I hinted that the last standing bears are fighting to the end against equities. A multitude of exotic and custom-made indicators have been thrown on the table including the latest total market capitalisation to gross domestic product (see chart), which has been held up as conclusive evidence that US equities are overvalued. Cleverly, the bears are tying this indicator to the fact that Warren Buffett said in a 2001 Fortune Magazine interview, that "it is probably the best single measure of where valuations stand at any given moment". Warren Buffett is in the absolute top echelon of investors that have ever walked this earth, but he has got this indicator wrong. There are four reasons why investors should be sceptical when using this ratio.
