In elevated market, Warren Buffett is missing from the chatter. That doesn’t mean his views are any less clear

“This time is different,” the rally cry of investors who spot an irrevocably changed market every few years, is in ample supply these days. Interest rates have reached a permanent low. U.S. stocks have reached a permanent high. FAANG stocks will rule markets for all time. Value investing is dead.

Let’s start with Buffett’s favourite stock market barometer, the market capitalization-to-GDP ratio. As its name suggests, it measures the total value of the stock market as a percentage of GDP. In simple terms, a lower ratio is bullish and a higher one is bearish. As a result, the financial sector has been one of the cheapest sectors by most measures for years. It’s still the most represented sector in many value indexes, including a 21 per cent allocation in the S&P 500 Value Index and 23 per cent in the Russell 1000 Value Index. That’s apparently not enough for Buffett, whose allocation to the sector is double that.

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