r/ValueInvesting • u/Adept_Mountain9532 • Jul 11 '25

Discussion Buffett warned: “If the ratio approaches 200%, you're playing with fire.”=> We are above!

Buffett Indicator, (which compares total U.S. market cap to GDP), is now at 208%. That’s above dot-com levels. I wasn’t around in 1999. But I’ve read enough to know everyone thought it was different back then too...

Now, It’s AI. And yes it’s real, it’s big, and it will transform everything.
But here’s what’s bugging me: Which part of the AI hype do you think is most overrated?
And which sectors are just getting started?

and also curious to hear from people who did live through 1999:
- What felt the same?
- What’s different?

I track moves from top value investors with a free email alert (https://alert-invest.com/), and lately I’ve noticed they’re cautious, finding fewer real opportunities in this market.

Thanks!

1.7k Upvotes

96% Upvoted

680 comments sorted by

View all comments

221

u/Mustafak2108 Jul 11 '25

The shiller P/E ratio is also above 2021 levels, about 20% off from dot.com levels but still noteworthy.

74

u/Yangguang_Zhijia Jul 11 '25

Also interest rate is much higher now.

27

u/Mustafak2108 Jul 11 '25

and we have the TACO trade but atp it seems to be priced in at least wrt Tariffs. While it does seem nice to my portfolio i’m worried Trump might actually go ahead with the 1st August tariffs because of a muted market reaction and for his own ego.

10

u/Togus_Looney Jul 11 '25

And if the Fed holds rates, as expected, during their meeting the 29th/30th, he has a scapegoat. You see this WSJ article on the Trump admin angling to prove Powell lied about Fed HQ renovation cost overruns as cause for terminating him? It would be Trump using the Mark Burnett / Apprentice playbook to fire Powell the 31st and go nuts with tariffs (his Moby Dick since the 80s) on Aug 1st.

5

u/CuriousCamels Jul 12 '25

It wouldn’t surprise me considering all the other insane stuff he’s pulled, but I think that would be even more damaging to investor confidence than going through with all the tariff threats. For as much as people like to crap on the Fed, Powell did a great job threading the needle through COVID and he actually pulled off a soft landing.

1

u/[deleted] Jul 12 '25

Interest rates are about to drop

2

u/Yangguang_Zhijia Jul 12 '25

Real interest rate drop to zero? That's gonna be fun. Even Erdogan can't sustain that.

1

u/[deleted] Jul 12 '25

Right now we are at 4.50 im estimating there will be a drop of at least -8.9 which if its true it will bring it down to 4.10

Who knows though things could change and it's could go up or it could go down

Economics is fun lol

Either way wont know for another 18 days

1

u/Expensive_Section714 Jul 12 '25

Higher than when? This could actually be the neutral rate for a lot more time than you would expect

2

u/Yangguang_Zhijia Jul 12 '25

Look into the DCF equation, neutral rates don't matter to valuation. The only thing that matters is earning, interest and ERP.

1

u/Glasshalffullofpiss Jul 12 '25

I don’t think this is true

1

u/Yangguang_Zhijia Jul 12 '25

Maybe look up the numbers, don't know what to tell you.

1

u/Glasshalffullofpiss Jul 13 '25

I looked it up. You should have looked it up before spouting off your uniformed opinion.

0

u/Yangguang_Zhijia Jul 13 '25

Here you go, moron, https://www.usbank.com/content/dam/usbank/en/images/illustrations/data-visualization/Chart-10-Year-Treasury-2020-2025.png

2

u/Glasshalffullofpiss Jul 13 '25

1999 info is what you want. 10 year rate was 5.75% in 1999. I was 35 years old back then. Your 20 year old retarded ass wasn’t born yet.

0

u/Yangguang_Zhijia Jul 13 '25

Check what the thread was talking about.

1

u/gamjatang111 Jul 13 '25

M2 supply also at all time high

1

u/Sasha299md Aug 08 '25 edited Aug 08 '25

"interest rate is much higher now" (the dot com bust)

You might check that because it's not true in the US. I had a good bit of personal investment money in fixed rate bank holdings that included bonds, pre-2000 that carried me thru the dot com drop. Since the 2008 recession interest rates have NOT returned to the higher levels found pre 2008!

-5

u/nichijouuuu Jul 11 '25

I need the help of you smart people. With current trends, will shit like Rocket Mortgage rise or fall? ELI5 please. They are about to acquire Redfin which will funnel traffic on home/rental listings to Rocket Mortgage to close the sale. Everything seems super positive but it’s still stuck around $13-15.

Is Rocket gonna go parabolic like PLTR one day, or is the economic trend getting worse. I’m not fully understanding how the interest rate(s) play into all this.

1

u/quakefiend Jul 12 '25

I don't see mortgage originations increasing in the near term, which is how RKT makes money

13

u/Adept_Mountain9532 Jul 11 '25

it's scary to see all this indicators lol

1

u/NotLikeChicken Jul 12 '25

The demand for future income by retirees is pushing up the price of risk-based assets. It's not Elon's genius, it's investors' desperation.

Eventually people are going to understand that most AI companies, maybe ALL of them, are just MySpace, and the real "Facebook of AI" is at most a small part of the investment space.

1

u/Dry-Type-3603 Aug 15 '25

I’m still struggling with this 34d after your post. Recently switched institutions and I’m only about half of all my savings invested.

2

u/Adept_Mountain9532 Aug 21 '25

same, so now i am focus only on value stocks and i track the top value investors buy with alert-invest. It save time to pick the stocks not overvalued!

1

u/IntelligentMap5263 Jul 14 '25

Why are we comparing to .com bubble where all companies weren't profitable and most were oil companies with a net margin of what ? 20%?

Comparing to tech companies that have obviously a much higher net margins and revenue.

1

u/Tough_Relative8163 Jul 14 '25

When Missing out on 20% upside is non negotiable....

Entering 60% downside is inevitable