CHART OF THE DAY: Warren Buffett's favourite Indicator

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Warren Buffett is a fan of keeping it simple in his investment analysis. This chart, which plots the total market cap of the stock market as a percentage of GNP, is one of his favourites.

As you can see, the measure made two sharp peaks in 1999 and then again in 2007. It’s cratered since, but with the latest run-up, we’re back in fair-value territory.

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