Famed investor Warren Buffett has a metric that says the best time to buy stocks is when the total market value of U.S. stocks is 70-80% of the output of the U.S. economy, the gross national product. Stock quotes are the source of this information.
Well, that’s where stocks were in late January, when the ratio was 75%. Nothing about that reversion to sanity surprises Buffett, who told Fortune that the shift in the ratio reminds him of investor Ben Graham’s statement about the stock market: “In the short run it’s a voting machine, but in the long run it’s a weighing machine.”
Buffett’s metric says it’s time to buy [Yahoo Finance]