Q: I've been curious about the Buffett Indicator (the ratio of total stock market valuation to GDP) for Canada. Am I correct in saying that it is about 1.7X or so, whereas it should be closer to 1:1 ? If so, what TSX stocks / sectors are pushing it up so high? I grabbed three large caps from different sectors to have a look at their present valuations...
You mentioned that BNS is historically cheap with a P/B of 1.2, so I'm guessing this one is fine.
If one looks at BCE's present P/E ratio it would be approximately brought back to 2012 levels if today's BCE stock valuation was reduced by "today's Buffet indicator overshoot".
TRP's present P/Cash Flow appears to be fairly high compared to some metrics in the past decade. Again, if the stock price was reduced by that 1.7 factor, maybe the valuation becomes more realistic.
I am only able to compare to metrics going back the past 10 years, so this may be part of the problem. Or perhaps I'm analyzing things wrong here and you have a different way at looking at this (?)
You mentioned that BNS is historically cheap with a P/B of 1.2, so I'm guessing this one is fine.
If one looks at BCE's present P/E ratio it would be approximately brought back to 2012 levels if today's BCE stock valuation was reduced by "today's Buffet indicator overshoot".
TRP's present P/Cash Flow appears to be fairly high compared to some metrics in the past decade. Again, if the stock price was reduced by that 1.7 factor, maybe the valuation becomes more realistic.
I am only able to compare to metrics going back the past 10 years, so this may be part of the problem. Or perhaps I'm analyzing things wrong here and you have a different way at looking at this (?)