What do you think about Buffett indicator
In Q&A Forum
Feb 26, 2021
I don't think I'm in the position to say whether Buffett indicator is accurate or not, but I have been mentioning the dangers of investing in some of the "hot" stocks in my blog: The stock market has gained a significant boost from the rise of retail investors and stimulus checks - I would agree with the Buffett indicator's claim on the stock market being overvalued. Just look around you; if you your friends, family and even your uber driver is talking about stocks, it's probably an indication that a lot of cash is being injected to the market today. That being said, the stock market is more likely to go down when it's overvalued, but no one knows when the correction will happen (slight correction in tech industry this week). It's also difficult to tell whether this market premium is a temporary one, as the U.S. stock market has been one of the most popular investment drivers for many investors. One advice that I can give in this volatile market is to keep yourself invested using the cost-averaging method (ex. contribute biweekly) while avoiding a large position on "hot" stocks - it worked last year, but it may not this year. Diversify your portfolio to gain a broader exposure, and stay focused on your long-term investment goals.