Showing posts from November, 2017

Warren Buffett’s favorite market metric suggests investors are ‘playing with fire’

By Shawn Langlois
Published: Oct 31, 2017 1:35 p.m. ETSHARE101‘If you stick your head in the sand and pretend that this isn’t anything to be concerned about, you aren’t going to like what comes next.’ReutersWarren Buffett participates in the newspaper tossing challenge.Warren Buffett once described his favorite market indicator as “the best single measure of where valuations stand at any given moment” and that when the metric exceeds certain levels, like it did back in 2000, “you are playing with fire.”If that’s the case, investors might want to blow out that candle.Put simply, the Buffett indicator is the total market capitalization of all U.S. stocks relative to the country’s gross domestic product. When it’s in the 70% to 80% range, it’s go time. When it moves well above 100%, it’s time to tap the brakes.The metric sits at almost 139% at the moment, which is getting awfully close to the record 145% it hit during the peak of the dot-com bubble in 2000, the only other time the number …

Three money managers who lived through the 1987 stock-market crash warn of danger today

By Philip van Doorn
Published: Oct 31, 2017 1:49 p.m. ETSHARE‘I would take some money off now because ... there are clear signs of deranged valuations,’ says Gabelli fund manager Lawrence HavertyGetty ImagesA trader on the New York Stock Exchange on Oct. 19, 1987 — Black Monday.When the stock market crashed on Oct. 19, 1987, investors panicked. It was an unfamiliar event — the previous decline of a similar magnitude occurred 58 years earlier, in 1929.Now, 30 years after Black Monday in 1987, there are professional investors still at work who lived through that fateful day. In interviews, three of them talked about their experiences, offered insights into warning signs and gave advice on how to handle major downturns.They are:• Lewis Altfest, president of Altfest Personal Wealth Management, which manages about $1.3 billion for private clients. Altfest founded the firm in 1983 after working as a general partner and director of research at Lord, Abbett & Co.• Brian McMahon, chief inve…