gold, page-28133

CORRECTION TERRITORY

The indicator that Buffett tracks closely is a market cap of S&P 500 vs. U.S. GDP, and this is extremely wise.

Think about it: This ratio is a clear sign of how expensive America's stock market is—if the valuations of the companies that are responsible most for the GDP are excessive, it's not a buying opportunity.

Buffett's rule of thumb is that 0.6% is bargain territory, and he is a buyer up to 0.9%, but over that, he becomes particularly picky, often not making any large decisions.

The U.S. economy is now over 1.1% with its selling territory, and either stocks will correct or GDP must miraculously adjust higher—be very selective with new opportunities in the mid-cap and large-cap indices