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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: J Mako who wrote (45197)	10/28/2011 2:16:52 AM
From: Spekulatius	Read Replies (1) \| Respond to of 78470

>>Warren Buffett looks at Market Cap / GNP.<< I don't like Market cap/ GNP. Market cap/ GNP is strongly dependent on the fraction of the economic activity that is related to companies that trade in stock exchanges. It is entirely conceivable that market cap/ GNP is a relatively small number, yet the companies that trade in the stock exchange are expensive by traditional metrics (like P/E, P/S, EV/ EBITDA) How could this happen? It could simply happen, when a vast amount of the economy is nationalized or in private hands and thus not related to companies on the stock exchange. To some extend that is true in Europe where the state tends to own a lot of commercial enterprises or private companies avoid listing on a stock exchange. That does not make the companies that trade on these stock exchanges cheap.