Buffet believes stock market is still reasonably valued

[opihiman2]

 

 

[captkerosene]

To me "reasonably valued" and "within a zone of reasonableness" are a little different.

[fareastwarriors]

What are the differences ?

[scorpioncapital]

Reasonably valued = in the middle of the zone?

[captkerosene]

I took his answer to mean that stocks were mostly very expensive but that he wasn't willing to make a market call on it. I think he said he's only made 5 market calls in his life. Saying that stock prices are "reasonable" implies prices much closer to fair value. 

[peter1234]

I took his answer to mean that stocks were mostly very expensive but that he wasn't willing to make a market call on it. I think he said he's only made 5 market calls in his life. Saying that stock prices are "reasonable" implies prices much closer to fair value.

 

Agreed.

 

I think it is very rare to hear 'cheap' or 'expensive' from him.

 

In the interview he talks about stock market value/GDP (similar to price/sales) and from that you can infer that he realizes that currently the market is not cheap.

 

On the other hand, at the Daily Journal meeting Munger talked about guaranteed regulated 8-10% returns being great in a very low interest environment.

 

So I think as long as they still find areas to put money in, he will call it 'reasonable'.

 

;)

 

[ukvalueinvestment]

To me, it's fairly clear that in what appears to be a permanently lower interest rate environment, todays's valuatios are "reasonable".  Reasonable means not obviously cheap and not obviously bubbly. 

 

He said somewhere that there have been two occasions that stocks have been obviously cheap - 2008 and 1974, and he openly said so.  Assuming he means the same on the topside, that means that things are in between ("reasonable") the vast majority of the time.