Warren Buffett: The Coming 45.1% Stock Market Reset

Warren Buffett’s favorite measure of the health of the stock market is sending some serious warning messages. In fact, this so-called “Warren Buffett indicator” is projecting that the US stock market has to fall by a whopping 45.1% in order for the stock market to be considered fairly valued. We are going to go into more detail on the specifics you need to know later on in this video, but first, a story.

The year was 1999. Warren Buffett was an attendee at the exclusive Sun Valley Conference in Idaho. This annual event is invite only and its attendee list consists of some of the biggest names in business and finance during that year. For background, 1999 was the peak of the infamous dot com bubble. The stock market had been soaring to sky high levels, seemingly shattering a new record every week. The Tech heavy NASDAQ index had rallied from 1,500 in January of 1995 to as high as 8,500 by the soon to be peak in February of 2000. This stock market bubble was driven by young internet companies with virtually no revenue or profits who had become the darlings of the stock market. Companies like Pets.com, Webvan, and Boo.com. These companies had little to show in the way of actual financial success. However, even more importantly to Wall Street at the time, these companies were internet based. In the minds of Wall Street, these businesses were destined to be massively profitable one day as the internet continued to grow in popularity.

This optimism came at a hefty price tag. During the dot com bubble, these internet companies saw their valuations soar to billions of dollars. Making their founders and early investors rich and famous. As a result, many of these newly minted billionaires were invited to the Sun Valley conference in 1999. Many of those invited to the conference were asked to give a presentation about a topic of their choosing. For days, Buffett listened to these newly minted wealthy founders give talks about how stock valuations didn’t matter, and that the stock market was going to continue to rise forever.

Finally, the time came for Buffett to speak his mind. The Keynote presentation at the end of the multi day conference was none other than Buffett himself sharing his thoughts on the stock market. Buffett got up on stage in front of a room full of new internet millionaires and billionaires proceeded to explain to them in his own folksy way why all of them were wrong. Buffett went on to explain how the stock market was incredibly overvalued. He argued that stocks were pricing in an excessively optimistic future. To make this point, he compared the total market capitalization of the stock market at the time, to the size of the economy.

Stock prices were so inflated that the value of the stock market was significantly larger than the size of the US economy. Buffett explained how this was unsustainable and the stock market would have to decline significantly at some point. As I’m sure you can imagine, the newly rich internet executives did not like what Buffett had to say. Both in public and behind his back, many of these people claimed that Buffett was out of touch and washed up. They said Buffett simply couldn’t grasp the fact that this time things were different. Oh the famous last words of investing: “This time is different”

*Disclaimer: Neither this video, not any content produced on this channel should ever be considered investing advice or official financial advice. All content is made for entertainment and educational purposes.

Related Posts

56 thoughts on “Warren Buffett: The Coming 45.1% Stock Market Reset

  1. Is apple’s Iphones included in US GDP, since they re produced in China? If so this indicator is totally correct. If not, since the world is more global for at least 30 years, most companies looking for cheaper countryies where they can reduce costs and therefore these products are not included in US GDP but increases company’s market cap.

    1. Most cash he ever has is is prob selling more as we speak. We only find out what he does after he had to report it which is usually a quarter behind from where he is. I could see him sitting on over 20 percent in cash. We have never had as many investors holding onto cash as the high yield savings rates is at 5 percent.

  2. The stock market is really based on supply and demand. For everyone selling stock there is a buyer and vice versa. Doesn’t the free trades now that anyone can do from there phone change things compared to the $14.99 trades we had with Etrade in the late 90s?

    1. Took me less than a year to hit my first 100k. I say this because a lot of traders don’t realize the importance of trade signals. Honestly, i am where i am today thanks to *JoeTradingSignalTV.* No denying that.

  3. Stock market has been crazy overvalued ever since i started looking 3 years ago and every tning is based on massive debt, this downturn was inevitable once interest rates came up.
    But we already had a crash and seems like recovery was no problem yet again, just dont worru and keep onvesting. ..

  4. My portfolio has good companies, however it has been stalling this year. With the present inflation and dollar devaluation I just got my money out of the bank, I invested some in gold and silver and I’ve approximately $700k stagnant in my reserve that needs growth, any suggestions to grow my portfolio will be highly appreciated

    1. There are many other interesting stocks in many industries that you might follow. You don’t have to act on every forecast, so I’ll suggest that you work with a financial advisor who can help you choose the best times to purchase and sell the shares or ETFs you want to acquire.

    2. I’ve been in touch with a financial advisor ever since I started my business. Knowing today’s culture The challenge is knowing when to purchase or sell when investing in trending stocks, which is pretty simple. On my portfolio, which has grown over $900k in a little over a year, my adviser chooses entry and exit orders.

    3. Mind if I ask you recommend this particular professional you use their service? i have quite a lot of marketing problems

    4. My advisor is PAMELA HELYNN KIRCHOFF , a renowned figure in her line of work. I recommend researching her credentials further. She has many years of experience and is a valuable resource for anyone looking to navigate the financial marke

    5. interesting! just copied and pasted her full name on my browser, found her site at once, and skimmed through her credentials, very much appreciate it.

  5. It is always good to have a financial plan. I work with a professional planner and fixed-income strategist in NY. The fixed income portion of your portfolio won’t simply serve as a buffer to the volatility of the equity portion of your portfolio, but will provide legitimate income.

    1. Very true, people downplay planners role, until burnt by their mistakes. I remember just after my layoff early 2020 amidst covid outbreak, I needed to stay afloat, hence researched for license-fiduciary advisors. Thankfully, I came across someone of practical knowledge, and decades of experience, I liquidated 200k of 325k from my 401k it has yield nearly 1M after subsequent investments so far.

    2. Making investments especially for a mast number of people involves a whole lot of risk and she recognises that and best believe this is the main reason for her long term success

    3. I have turned over more than half mil working with Lucy on a wide array of options and finally sticking to a few that have been favorable in the past 2 years. I began working with her in October 22 after the Fed lended 300b usd for stimulus to stem crisis, I knew I needed help.

  6. Roughly £120k in my portfolio are in tech/TSLA stocks, can I get an advice on any other stocks that I can acquire to diversify my reserve across multiple markets while creating a comprehensive portfolio allocation that balances my concerns of risk aversion and returns that meet yearly inflation.

    1. You need to hire a financial advisor to help you diversify your portfolio by including Mutual Funds, Etf’s, the 11 GICS groups, inflation-indexed bonds, and stocks of companies with reliable cash flows rather than growth stocks, where prices were based on future prospective earnings.

    2. @jake gowon That’s correct. At first, I wasn’t too pleased with my gains compared to my previous performances, I was doing so poorly, I thought I needed to diversify into better assets, so I got in touch with an investment-advisor. That same year, I pulled a net gain of £550k, which is about 10 times more than I average on!!

    3. @Kolly Kolly My portfolio has been in the gutter for the entire year, so I started researching new ways to profit in the market, but everything I tried just seemed to miss the mark. Please let us know the name of your financial advisor

    4. @Patricia Carlos Do your due diligence and opt for one that has tactics to help your portfolio continue consistent and steady growth. “Tenley Megan Amerson” is accountable for the success of my portfolio, and I believe she has the qualifications and expertise to accomplish your objectives…

    5. @Kolly Kolly Thank you for this Pointer. It was easy to find your handler, She seems very proficient and flexible. I booked a call session with her.

  7. its 47% overall average, However for the top 500’s it more like 74 to 131%. such a”reset” i would be a nasty one.

  8. Valuations in some companies are high but the growth in others with AI will be ridiculous so even if you hold the voo Sp500 you will be OK but better to pick your stocks for better returns

  9. I for one am not very concerned about any impending collapse or disaster. Since I learned that if you are well-prepared and informed, every crash, reset, or collapse gives an equal market opportunity. I’ve witnessed individuals amass over $1,000,000 throughout crises and even manage it with ease during tough economic times. Without a doubt, someone has become enormously wealthy as a result of the boom or bust.

    1. Yes, a good number of folks are raking in huge 6 figure gains in this downtrend, but such strategies are mostly successfully executed by folks with in depth market knowledge

    2. @tommymyershoffman I agree. Based on personal experience working with an investment advlsor, I currently have $985k in a well-diversified portfollo that has experienced exponential growth. It’s not only about having money to invest in st0cks, but you also need to be knowledgeable, persistent, and have strong hands to back it up.

    3. @marvishaN How do I become involved with this? I’m enthusiastic to join since I truly hope to build a stable financial future. Who is the driving force behind your achievements?

    4. @gatesbev There are a lot of independent advisors you might look into. But i only work with ‘Heather Lee Larioni’ and I have been working together for nearly four years, and she is excellent. You could proceed with her if she satisfies your discretion. I endorse her.

    5. @marvishaN I just googled her and I’m really impressed with her credentials; I reached out to her since I need all the assistance I can get. I just scheduled a caII.

  10. If history is a teacher, it never really falls to only the true value so expect a 80% or lower bottom when it does actually fall!!!!

  11. “The only significance of stock market gyrations to the true investor is that they give him an opportunity to buy good common stocks when they are cheap — or at least reasonably priced — and at times offer him an invitation to sell out at temptingly high levels.”
    – Benjamin Graham

  12. “Big Short” investor Steve Eisman said the sizzling stock market rally of 2023 can run on as long as the US economy stays strong. I’ve been sitting on over $345K equity from a home sale and I’m not sure where to go from here, is it a good time to buy into stocks or do I wait for another opportunity?

    1. When people have money, they spend it. And some people have a tendency to spend more money when they have more of it. If you want to handle your money better, you should talk to a financial professional.Learn more.

    2. Very true. Despite having no prior investing knowledge, I started investing before the pandemic and pulled in a profit of approximately $950k that same year. In reality, all I was doing was getting professional advice.

    3. @Jeffery shelton How can I participate in this? I sincerely aspire to establish a secure financial future and am eager to participate. Who is the driving force behind your success?

    4. It would be very innovative suggestion to look out for Financial Advisors like Julie Anne Hoover ’ who can help shape up your portfolio. Trying times are ahead, and good personal financial management will be very important to weather the storm.

    5. @Jeffery shelton Thanks for sharing, I just looked her up on the web and I would say she really has an impressive background in investing. I will write her an e-mail shortly.

  13. Crypto user could top 1B by the end of 2023 as nations continue to adopt Bitcoin Buy the dip, and HODLfor the long term .Bitcoin Always comes back.

    1. Good point , seeing as an estimated 3-5% ( closer to 2-3% in Dec 21) of world population owns crypto. To grow to 1B in year would be amazing! However, with the current state of things , zthat growth might be low estimate the US/USD , continue to debase, etc have been and continue worsening.

    2. Investing and trading are more than just having TA skills.there is a big component of discipline and emotional maturity,that one has to work on! Time in the market vs timing the market. If you keep that mentality as an investor, you will stay calm during the storm! Within some months I was making a lot more money and have continued on that same path

    3. I think it’s brilliant to use brokerage advisor for investing! Prior to speaking with an advisor I was actually suffering an investing nightmare during the economic crash in March 2020. In summary, with the help of my advisor, I have so far grown my initial $120k investment to over $550k

    4. I’d recommend investing in good projects after DYOR and DCA rather than going all in at once to ensure a good average. I don’t buy /trade just for the sake of it ,instead I sought the advice of a fiduciary financial advisor, Jessica Katherine Ellis who guides me through the process, I made £70,000 profits in my portfolio in Q2 2022

  14. Great thoughts! The year is almost over and very glad about the decisions I have made so far. Investing in the market earlier this year regardless of the market conditions has saved my life. I made over 70k USD with a start of 25k in the last 7 months. I know it’s nothing compared to what others make but I’m glad I’m changing my finances. If things keep going well I might retire soon>.

    1. Spot on. The market presents different opportunities to create passive lncome, with the right skill and proper understanding you’re good to go.

    2. You’re right, the best time to buy in the market is when there’s fear. A huge part of my growth has also come during this bear market. This year alone, I have scaled from 180k to over 354k.

    3. I diversify my portfoIio into real estate crowdfunding, stocks, and cryptomarket. Although I’m able to achieve this with the guidance of *Anna Kristine*

  15. Stocks seem like an interesting investment. I am currently doing an experiment where I am trying to trade 2$ to 1000$ just to see if it can be done. I just do Forex and commodities CFDs etc though and mainly statistical and technical analysis rather than fundamentals. But I’m trying lol. BTW I’m up to 30$ so far.

Leave a Reply

Your email address will not be published. Required fields are marked *