At this time the Bags could be "more worthy of consideration not only compared to last November's peak, but also compared to that pre-pandemic world which today appears to us as a sort of golden age”. He supports it Alessandro Fugnoli, Kairos strategist, in his monthly podcast “On the fourth floor”. However, the analyst points out that this assessment is linked to a particular indicator: the ratio between the overall stock market capitalization and GDP. In essence, if the Stock Exchange is worth more than GDP it means that share prices are high, while if it is worth less, "it may be interesting to consider for a purchase".
Warren Buffett and the stock exchanges/GDP ratio
This indicator, the favorite from Warren Buffett to evaluate prices, it is in itself "very crude", continues Fugnoli, warning that "all the individual metrics used to evaluate stock exchanges must be taken with caution and common sense, and this is certainly no exception".
Having made this clarification, it is still interesting to note that today the total value of world stock exchanges, updated daily by Bloomberg, fell to 96 trillion dollars, while nominal GDP this year, inflated by inflation, will be almost 104 trillion dollars.
Exchanges and markets: what to focus on for the medium term?
"I know the bags in the coming months they will remain at current levels, and even more so if they go down, the discount with respect to GDP will become even more marked - continues Fugnoli - Nominal GDPIn fact, thanks to inflation it will continue to grow even in the event of a recession. And the more marked the discount on the stock exchanges, the more worth it, if you have a medium-term horizon, to start looking around to evaluate what to buy calmly between now and the end of 2023".
Energy
Fugnoli points out that Buffett in this phase is focusing a lot on thethe energy, “a sector at a deep discount within a stock market which in turn is at a discount on GDP”. Not only that: even if the demand for energy falls in the event of a recession, "in the coming months, the supply of energy could fall much faster than the demand, thus favoring new upward tensions on prices".
Cyclical companies
Another sector to keep under control, always second Fugnoli, “is that of cyclical companiesable to conserve pricing power even in a recessionary environment. We are talking above all of companies that operate in sectors in which, thanks to the concentration of recent decades, competition has been greatly reduced”.
Global stock exchanges: opportunities are for those looking to 2024 and beyond
In general, the slowdown ofworld economy, “which will become visible at the end of this year or the beginning of next and which will last for a good part of 2023, has already begun to create and will create even more interesting opportunities for those looking at 2024 and beyond – he concludes Fugnoli – Those who, on the other hand, have a shorter horizon, limited to the next 12 months, will do well to take advantage of the rebounds to lighten up”.
