Warren Buffett Indicator Predicts Stock Market Crash in 2017

The comments above & below is an edited and abridged synopsis of an article by John Whitefoot

In 2016, which saw the S&P 500 advance 10%, Warren Buffett added around $12 billion to his fortune. One of his greatest investing mantras is to be greedy when others are fearful and fearful when others are greedy. Never has more sound advice been given.

With 2017 half over, and despite gridlock in Washington, drama in the White House, and barely-there economic growth, the S&P 500 remains bullish. It has advanced 9.8% and is in record territory. It is up more than 14% since Trump won the election in November 2016.

Wall Street remains optimistic despite what`s going on within the US. Meanwhile, tensions in the UK, North Korea, the Middle East and terrorist attacks will all have an effect on the US economy and the stock market.

Whitefoot discusses: how the Warren Buffett Indicator shows that stocks are significantly overvalued; how other indicators  show that stocks are significantly overvalued; how Buffett is sitting on a record pile of cash; and how Buffett`s actions point to a stock market crash.

As it stands, everything is in place for a serious stock market correction; the question is when. With markets in record territory and momentum strong, the next crash may not be around the corner. But with valuations getting further and further out of whack, stocks will have further to fall when a crash comes.

That doesn’t mean investors are in the clear in 2017. While a stock market crash induced by bad US economic indicators is not all that likely in the coming months, there are black swan events that could send stocks into a tailspin.

This is where the Oracle of Omaha shines, when investors are fearful and running for the exits.