Tap Dancing to Work: Warren Buffett on Practically Everything, 1966-2013

by Carol J. Loomis

The stock market kept going down and down in the first days of 2009, and we decided at Fortune that it just might be time to update Buffett’s market metric—the relationship of the total value of U.S. stocks to GNP. We had run a chart of that metric in late 2001, in “Warren Buffett on the Stock Market” (see page 191). The message then was a clarion “Don’t buy!” But, this time, when my coauthor on this piece, Doris Burke, ran the numbers, they showed that the market was definitely in Buffett’s buying range. So we published this article and chart in an issue that reached subscribers around February 1. Okay, this buy signal wasn’t perfect: From February 1, the S&P 500 viciously went down another 18 percent before bottoming on March 9. Even so, if you’d bought an S&P 500 total return ETF on that February 1 and held until midyear 2012, you would have earned a 78 percent total return—and been very happy that Buffett shared this metric.