With the Fair Value Calculator method, you invest in stocks that are actually worth more than they currently cost. However, if you buy into a currently overheated market, Fair Value stocks could suffer from a negative market environment. Especially large stocks with a high market volume have a high correlation to the development of the overall market. To improve your investment and to assess whether the market is cheap or expensive, it is worth taking a look at the here presented market watch.
RED - Market overpriced and overvalued.
A market correction must be assumed.
Stock prices have risen exponentially compared to the real economy. Here a bubble threatens to burst!
We advise against a current investment in shares.
less than 0,75 points
0,75 - 1 points
more than 1 points
Shaded areas indicate U.S. recessions.
The comparison of the "Wilshire 5000 Full Cap Price Index" and the Gross National Product provides information on whether the market is currently cheap or expensive. Here, the total market volume of a market is compared with the sum of all real goods and services in the same market.
This allows a causal comparison between the stock market and the real economy.
The charted watch chart here compares US GNI to the Wilshire 5000 Index, which also represents the US overall market. The BNE / GNP includes all real US goods and services, the Wilshire Index 5000 the market capitalization of all stock companies in the market. So, the true value is compared to the stock market value, as we pursue in the Fairvalue Calculator Investment Strategy. An additional trigger would therefore be an investment in an undervalued market.
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