Today it's trading nearwhich equates to a percent increase in the large-cap stock index over the last seven-and-a-half years. There is no question that this bull market has been strong and long-lasting. There are others, however, who say stocks have room to run, particularly now with a Trump victory and a strong rotation into financials and other segments of the market, and that equities are the best alternative compared to other asset classes they compete with.

Both arguments are compelling, so what's an investor to do? Let's take a look at the current positioning and wisdom of Berkshire Hathaway chairman and CEO Warren Buffettone of the best investors of all time, to get a sense of where the markets are and the value they offer.

First off, Buffett is a die-hard, long-term optimist on the U. It is very rare for Buffett to voice a less-than-optimistic view about the prospects for stocks in the long run. When asked after Donald Trump's election — Buffett was a big Clinton supporter — how stocks would react, Buffett said that stocks will be higher in 10, 20 and 30 years. He said the performance of companies over time is what drives those stock returns, not necessarily who wins the race for the presidency.

But Buffett has at various times warned investors about paying attention to the market's overall valuation. Back inBuffett asserted that the ratio of market capitalization to gross national product GNP "is probably the best single measure of where valuations stand at any given moment. The rationale is that a country's economic output should somehow track the earnings of its companies and therefore share value.

Buffett highlighted the fact that in the late s to during the dot-com bubble"the ratio rose to an unprecedented level" and again escalated, leading up to the financial crisis. The following chart shows upward pressure in recent years as well. Buffett admits that the ratio has "certain limitations in telling you what you need to know. One such limitation could be the effect of overseas business operations on both market capitalization and GNP figures.

First, GNP represents the total value of products, services and people within a country's boundaries, whether by domestic or foreign businesses. Second, market value is a combination of both domestic and international businesses. Differences in financial reporting, accounting rules, regulations, customs and tax laws create potential complications with respect to available data.

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Here is a limitation Buffett did not mention but is important to our analysis. While Buffett specifically used GNP in his ratio, we are going to use GDP instead, because 1 it's more commonplace and easier for investors to stock market for dummies books, and 2 GDP and GNP track very closely.

Bureau of Economic Analysis made the switch from GNP to GDP shops open on anzac day melbourne its primary economic measure in and, in doing so, said the difference between the two measures was "little.

The ratio is now the highest it has been it was even a little higher in since the market went over a cliff inwhen the ratio had actually been percent. As stated in his essay, "For investors to gain wealth at a rate that exceeds the growth of U. How the market's current valuation plays into Buffett's thinking in the current environment is hard to know, and Buffett remains constructive on stocks in the long run.

Berkshire recently took relatively small positions in a handful of airlinesincluding American Airlines, Delta and United Continental. But despite those new purchases, the high amount of cash could be a sign he is not finding tons of value in today's market. Buffett has always been fully transparent on his view that declining stock prices — of fundamentally sound businesses — present enormous opportunity. In a article, columnist Jason Zweig recounted a comment Buffett made at that year's Berkshire annual meeting about what what is bid quantity in stock market do when who engaged in binary options go down.

If a stock goes down 50 percent, I'd look forward to it.

| Global Market Cap to GDP (GNI) by Country'|yvajotefihy.web.fc2.com

In fact, I would offer you a significant sum of money if you could give me the opportunity for all of my stocks to go down how to read forex charts like a pro percent over the next month.

Buffett's ability to identify quality companies at attractive prices and hold them for a very long time has been key to his success.

But I think there is another ingredient as well — that of being patient when the market isn't providing attractive valuations and using cash strategically to buy when everyone else is selling.

As Alice Schroeder, author of the Buffett biography "Snowball," wrote, "He thinks of cash as a call option with no expiration date, an option on every asset class, with no strike price.

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A simple market measure monitored by Warren Buffett says stocks may be overvalued John Reese, co-founder at Validea Capital Management, which manages the Validea Market Legends ETF. Paul Morigi Fortune Time Inc Getty Images. A dent in die-hard optimism First off, Buffett is a die-hard, long-term optimist on the U. Time for investors to get off the couch and grab this key tax break Yield chasers, don't blame Trump Millionaires' best markets advice to investors right now Here is a limitation Buffett did not mention but is important to our analysis.

Buffett's cash clue How the market's current valuation plays into Buffett's thinking in the current environment is hard to know, and Buffett remains constructive on stocks in the long run.

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