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The Buffett Indicator at All-Time Highs: Is This Cause for Concern?

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The Buffett Indicator - Stock Market Value to GDP

Buffett Indicator at All-Time Highs: A Cause for Concern?

In 2001, Warren Buffett famously described the stock market capitalization-to-GDP ratio as “the best single measure of where valuations stand at any given moment.”

This ratio, now commonly known as the Buffett Indicator, compares the size of the stock market to that of the economy. A high ratio indicates an overvalued market—and as of February 11, 2021, the ratio has reached all-time highs, indicating that the U.S. stock market is currently strongly overvalued.

Today’s graphic by Current Market Valuation (CMV) provides an overview of how the Buffett Indicator has changed since 1950. We’ll also explain how the ratio is calculated, and why things might not be as dire as seem.

The Buffet Indicator, Explained

Before diving into the data, let’s cover the basics—what is the Buffett Indicator, and how is its value calculated?

The Buffett Indicator is a ratio used by investors to gauge whether the market is undervalued, fair valued, or overvalued. The ratio is measured by dividing the collective value of a country’s stock market by the nation’s GDP.

Measuring Total Value

CMV used the Wilshire 5000 index, along with data from the Federal Reserve for the historical component, to measure the collective value of the U.S. stock market. Here’s a look at the nation’s composite market value since 1950:

US Market Value since 1950

As the chart indicates, the market has experienced steady growth since 2010. And as of February 11, 2021, its total value sits at $49.5T.

Measuring GDP

For the data on GDP since 1950, CMV dipped into the archives from the U.S. Government’s Bureau of Economic Analysis:

US GDP since 1950

While the Bureau’s data is published quarterly, it doesn’t provide the latest figures. So to find Q1 2021 GDP, CMV used data from the Federal Reserve Bank of Atlanta, and came up with an annualized GDP of $21.7T.

The Ratio

According to Warren Buffett, “if the ratio approaches 200%…you are playing with fire.”

The Buffett Indicator since 1950

And with the current U.S. ratio sitting at 228%—about 88% higher than historical averages, it certainly looks like things are heating up.

Will History Repeat Itself?

As the popular investing expression goes, the trend is your friend. And historically, the Buffett Indicator has predicted several of America’s most devastating economic downturns.

Here’s a look at some historical moments in the U.S. stock market, and where the Buffett Indicator was valued at the time:

DateEventBuffett IndicatorValue (+/- Trendline)
October 1987Black MondayFairly Valued-13%
March 2000Dotcom BubbleStrongly Overvalued+71%
December 2007Pre-Financial CrisisFairly Valued+18%
March 2009Financial Crisis BottomUndervalued-46%
February 2020COVID-19Overvalued+49%
February 2021TodayStrongly Overvalued+88%

As the table shows, the ratio spiked during the Dotcom Bubble, and was relatively high in the months leading up to the 2008 financial crisis. But does that mean we should take the ratio’s current spike as a warning for a market crash in the near future? According to some experts, we might not need to sound the alarms just yet.

Why are some investors so confident in the current market? One main factor is low interest rates, which are expected to stay low for the foreseeable future.

When interest rates are low, borrowing money becomes cheaper, and future real earnings are theoretically worth more, which can have a positive impact on the stock market. And low interest rates mean smaller returns for low-risk assets like bonds, which lowers investor demand and ultimately boosts stock prices further. Meaning that, as long as interest rates are at record lows, the Buffett Indicator will likely stay high.

However, history has been known to repeat itself. So, while we might not need to fasten our seatbelts just yet, this historically high ratio is certainly worth paying attention to.

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World Beer Index 2021: What’s the Beer Price in Your Country?

The global desire for beer prevails even in a pandemic. These maps compare the average beer price in 58 countries—just how much do we drink?

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What’s the Beer Price in Your Country?

View the high resolution of this infographic by clicking here.

Although fewer people have been able to grab a beer at the pub during this pandemic, the global desire for beer prevails. For example, sales of the Corona beer actually shot up in the past year, despite—or perhaps because of—associations with the coronavirus.

This World Beer Index from Expensivity compares the average price of a bottle of beer in 58 countries in a detailed map. Additionally, we show which countries spend the most on beer per capita, and just how much beer people really drink.

Pricey Pints: The Average Beer Price

Researchers calculated the average price of a typical bottle of beer (330ml, just shy of a pint) from well known brands via online stores and statistics database Numbeo. In addition, local beer prices were pulled from hotel and bar menus, and average values converted to USD.

In Qatar, you’d have to shell out $11.26 for a single beer, which would surely make for a really expensive night out on the town. In part, this is because in 2019, the Muslim-majority country introduced a 100% excise tax on top the previous sales price of all alcohol imports.

These steep prices are aimed at tourists—and with Qatar hosting the 2022 men’s soccer World Cup, there’ll be thousands of visitors in the country looking for a cold one at any price.

RankCountryCapital CityAverage Price of a Beer
1South AfricaPretoria, Bloemfontein, Cape Town$1.68
2UkraineKyiv$1.76
3ArgentinaBuenos Aires$1.79
4Bosnia And HerzegovinaSarajevo$1.96
5GhanaAccra$2.05
6TunisiaTunis$2.09
7GeorgiaTbilisi$2.30
8North MacedoniaSkopje$2.34
9ChileSantiago$2.40
10Czech Republic (Czechia)Prague$2.49
11RwandaKigali$2.52
12BrazilBrasilia$2.52
13HaitiPort Au Prince$2.66
14ColombiaBogota$2.72
15SpainMadrid$2.74
16PanamaPanama City$2.74
17Sri LankaColombo$2.77
18HungaryBudapest$2.84
19ArmeniaYerevan$2.96
20IndonesiaJakarta$3.17
21AzerbaijanBaku$3.18
22GuyanaGeorgetown$3.39
23BoliviaSanta Cruz$3.42
24KazakhstanNur-Sultan$3.44
25BelgiumBrussels$3.47
26TurkeyIstanbul$3.61
27MaltaValletta$3.65
28BelarusMinsk$3.72
29EgyptCairo$3.80
30IndiaNew Delhi$3.90
31CanadaOttawa$3.96
32AustriaVienna$3.99
33WalesCardiff$4.06
34NepalKathmandu$4.13
35ScotlandEdinburgh$4.18
36GreeceAthens$4.25
37PhilippinesManila$4.25
38PolandWarsaw$4.37
39MexicoMexcio City$4.46
40LithuaniaVilnius$4.55
41South KoreaSeoul$4.56
42NetherlandsAmsterdam$4.60
43GermanyBerlin$4.64
44MalaysiaKuala Lumpur$4.74
45United StatesWashington D.C.$4.75
46ThailandBangkok$4.82
47PortugalLisbon$5.06
48RussiaMoscow$5.08
49SingaporeSingapore$5.17
50DenmarkCopenhagen$5.20
51ItalyRome$5.83
52EnglandLondon$5.97
53JapanTokyo$6.16
54SwitzerlandBern$6.23
55FranceParis$6.39
56ChinaBeijing$7.71
57JordanAmman$9.40
58QatarDoha$11.26

At just $1.68 per bottle, South Africa has the lowest average beer price thanks at least partially to cultural norms of buying in bulk.

Cashing In: The Per Capita Spend on Beer

The price of a single beer is one thing, but which countries spend the most on beer itself? Germany unsurprisingly tops the list here with nearly $2,000 of expenditures per capita, bolstered by its strong beer culture and annual Oktoberfest celebration.

Germany also prides itself on the purity of its beer—the vast majority of brewers follow the Reinheitsgebot, centuries-old purity laws that broadly state that beer may contain only three ingredients: water, barley, and hops.

World Beer Index 2021 - Per Capita Spend on Beer 820px
View the high resolution of this infographic by clicking here.

Following closely behind is Poland, which spends $1,738 per capita. Meanwhile, the U.S. ranks eighth in the world for the highest spending on beer per capita at $1,554—beer is also the country’s most popular alcoholic beverage.

Getting Boozy: How Much Beer Do People Drink?

Using data from the World Health Organization, the visualization below also digs into how much beer is consumed around the world per capita.

The Czech Republic emerges on top in this regard, with 468 beers on average in a year—that works out to 1.3 beers per day. Spain and Germany are next with 417 and 411 beers, respectively.

World Beer Index 2021 - Per Capita Beer Consumption 820px
View the high resolution of this infographic by clicking here.

On the flip side, people in Haiti only drink about four beers yearly. This may be because they prefer something a little stronger—97% of alcohol consumption in the nation comes from spirits such as rum.

Beer has been around for over 7,000 years. No matter the beer price in your country, it’s worth raising a glass to the timelessness of this humble beverage.

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The Population of China in Perspective

China is the world’s most populous country. But how does the population of China compare to the rest of the world?

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population of china

The Population of China in Perspective

China is the world’s most populous country with an astounding 1.44 billion citizens. Altogether, the size of the population of China is larger than nearly four regions combined: South America, Europe (excluding Russia), the U.S. & Canada, and Australia & New Zealand.

Using data from the United Nations, this unconventional map reveals the comparative size of China’s population next to a multitude of other countries.

Note: To keep the visualization easy to read, we’ve simplified the shapes representing countries. For example, although we’ve included Alaska and Hawaii in U.S. population totals, the U.S. is represented by the contiguous states map only.

A Historical Perspective

Looking at history, the population of China has more than doubled since the 1950s. The country was the first in the world to hit one billion people in 1980.

However, in 1979, in an attempt to control the burgeoning population, the infamous one-child policy was introduced, putting controls on how many children Chinese citizens could have.

While the government eventually recognized the negative implications of this policy, it appeared to be too little, too late. The two-child policy was introduced in 2016, but it has not yet reversed the current slowdown in population growth.

YearChina's Population (Millions)Annual Rate of Growth (%)Median AgeFertility Rate
1955612.22.00%22.26.11
1960660.41.53%21.35.48
1965724.21.86%19.86.15
1970827.62.70%19.36.30
1975926.22.28%20.34.85
19801,000.11.55%21.93.01
19851,075.61.47%23.52.52
19901,176.91.82%24.92.73
19951,240.91.07%27.41.83
20001,290.60.79%30.01.62
20051,330.80.62%32.61.61
20101,368.80.57%35.01.62
20151,406.80.55%36.71.64
20161,414.00.51%37.01.65
20171,421.00.49%37.01.65
20181,427.60.47%37.01.65
20191,433.80.43%37.01.65
20201,439.30.39%38.41.69

The fertility rate has been consistently falling from over 6 births per woman in 1955 to 1.69 in 2020. Today, the median age in China is 38 years old, rising from 22 in 1955. Longer life spans and fewer births form a demographic trend that has many social and economic implications.

Overall, China’s young population is becoming scarcer, meaning that the domestic labor market will eventually begin shrinking. Additionally, the larger share of elderly citizens will require publicly-funded resources, resulting in a heavier societal and financial burden.

Strength in Numbers

Despite these trends, however, China’s current population remains massive, constituting almost 20% of the world’s total population. Right now 71% of the Chinese population is between the ages of 15 and 65 years old, meaning that the labor supply is still immense.

Here are the populations of 65 countries from various regions of the world—and added together, you’ll see they still fall short of the population of China:

CountryPopulation Region
🇺🇸 U.S.331,002,651North America
🇨🇦 Canada37,742,154North America
🇧🇷 Brazil212,559,417South America
🇨🇴 Colombia50,882,891South America
🇦🇷 Argentina45,195,774South America
🇵🇪 Peru32,971,854South America
🇻🇪 Venezuela28,435,940South America
🇨🇱 Chile19,116,201South America
🇪🇨 Ecuador17,643,054South America
🇧🇴 Bolivia11,673,021South America
🇵🇾 Paraguay7,132,538South America
🇺🇾 Uruguay3,473,730South America
🇬🇾 Guyana786,552South America
🇸🇷 Suriname586,632South America
🇬🇫 French Guyana298,682South America
🇫🇰 Falkland Islands3,480South America
🇦🇺 Australia25,499,884Oceania
🇳🇿 New Zealand4,822,233Oceania
🇩🇪 Germany83,783,942Europe
🇫🇷 France65,273,511Europe
🇳🇱 Netherlands17,134,872Europe
🇧🇪 Belgium11,589,623Europe
🇦🇹 Austria9,006,398Europe
🇨🇭 Switzerland8,654,622Europe
🇱🇺 Luxembourg625,978Europe
🇲🇨 Monaco39,242Europe
🇱🇮 Liechtenstein38,128Europe
🇮🇹 Italy60,461,826Europe
🇪🇸 Spain46,754,778Europe
🇬🇷 Greece10,423,054Europe
🇵🇹 Portugal10,196,709Europe
🇷🇸 Serbia8,737,371Europe
🇭🇷 Croatia4,105,267Europe
🇧🇦 Bosnia and Herzegovina3,280,819Europe
🇦🇱 Albania2,877,797Europe
🇲🇰 North Macedonia2,083,374Europe
🇸🇮 Slovenia2,078,938Europe
🇲🇪 Montenegro628,066Europe
🇲🇹 Malta441,543Europe
🇦🇩 Andorra77,265Europe
🇸🇲 San Marino33,931Europe
🇬🇮 Gibraltar33,691Europe
🇻🇦 Vatican City801Europe
🇬🇧 United Kingdom67,886,011Europe
🇸🇪 Sweden10,099,265Europe
🇩🇰 Denmark5,792,202Europe
🇫🇮 Finland5,540,720Europe
🇳🇴 Norway5,421,241Europe
🇮🇪 Ireland4,937,786Europe
🇱🇹 Lithuania2,722,289Europe
🇱🇻 Latvia1,886,198Europe
🇪🇪 Estonia1,326,535Europe
🇮🇸 Iceland341,243Europe
Channel Islands173,863Europe
🇮🇲 Isle of Man85,033Europe
🇫🇴 Faroe Islands48,863Europe
🇺🇦 Ukraine43,733,762Europe
🇵🇱 Poland37,846,611Europe
🇷🇴 Romania19,237,691Europe
🇨🇿 Czechia10,708,981Europe
🇭🇺 Hungary9,660,351Europe
🇧🇾 Belarus9,449,323Europe
🇧🇬 Bulgaria6,948,445Europe
🇸🇰 Slovakia5,459,642Europe
🇲🇩 Moldova4,033,963Europe
Total1,431,528,252

To break it down even further, here’s a look at the population of each of the regions listed above:

  • Australia and New Zealand: 30.3 million
  • Europe (excluding Russia): 601.7 million
  • South America: 430.8 million
  • The U.S. and Canada: 368.7 million

Combined their population is 1.432 billion compared to China’s 1.439 billion.

Overall, the population of China has few comparables. India is one exception, with a population of 1.38 billion. As a continent, Africa comes in close as well at 1.34 billion people. Here’s a breakdown of Africa’s population for further comparison.

CountryPopulation Region
🇳🇬 Nigeria206,139,589Africa
🇬🇭 Ghana31,072,940Africa
🇨🇮 Côte d'Ivoire26,378,274Africa
🇳🇪 Niger24,206,644Africa
🇧🇫 Burkina Faso20,903,273Africa
🇲🇱 Mali20,250,833Africa
🇸🇳 Senegal16,743,927Africa
🇬🇳 Guinea13,132,795Africa
🇧🇯 Benin12,123,200Africa
🇹🇬 Togo8,278,724Africa
🇸🇱 Sierra Leone7,976,983Africa
🇱🇷 Liberia5,057,681Africa
🇲🇷 Mauritania4,649,658Africa
🇬🇲 Gambia2,416,668Africa
🇬🇼 Guinea-Bissau1,968,001Africa
🇨🇻 Cabo Verde555,987Africa
🇸🇭 Saint Helena6,077Africa
🇿🇦 South Africa59,308,690Africa
🇳🇦 Namibia2,540,905Africa
🇧🇼 Botswana2,351,627Africa
🇱🇸 Lesotho2,142,249Africa
🇸🇿 Eswatini1,160,164Africa
🇪🇬 Egypt102,334,404Africa
🇩🇿 Algeria43,851,044Africa
🇸🇩 Sudan43,849,260Africa
🇲🇦 Morocco36,910,560Africa
🇹🇳 Tunisia11,818,619Africa
🇱🇾 Libya6,871,292Africa
🇪🇭 Western Sahara597,339Africa
🇨🇩 Democratic Republic of the Congo89,561,403Africa
🇦🇴 Angola32,866,272Africa
🇨🇲 Cameroon26,545,863Africa
🇹🇩 Chad16,425,864Africa
🇨🇬 Congo5,518,087Africa
🇨🇫 Central African Republic4,829,767Africa
🇬🇦 Gabon2,225,734Africa
🇬🇶 Equatorial Guinea1,402,985Africa
🇸🇹 Sao Tome and Principe219,159Africa
🇪🇹 Ethiopia114,963,588Africa
🇹🇿 Tanzania59,734,218Africa
🇰🇪 Kenya53,771,296Africa
🇺🇬 Uganda45,741,007Africa
🇲🇿 Mozambique31,255,435Africa
🇲🇬 Madagascar27,691,018Africa
🇲🇼 Malawi19,129,952Africa
🇿🇲 Zambia18,383,955Africa
🇸🇴 Somalia15,893,222Africa
🇿🇼 Zimbabwe14,862,924Africa
🇷🇼 Rwanda12,952,218Africa
🇧🇮 Burundi11,890,784Africa
🇸🇸 South Sudan11,193,725Africa
🇪🇷 Eritrea3,546,421Africa
🇲🇺 Mauritius1,271,768Africa
🇩🇯 Djibouti988,000Africa
🇷🇪 Réunion895,312Africa
🇰🇲 Comoros869,601Africa
🇾🇹 Mayotte272,815Africa
🇸🇨 Seychelles98,347Africa
Total1,340,598,147

Future Outlook on the Population of China

Whether or not China’s population growth is slowing appears to be less relevant when looking at its sheer size. While India is expected to match the country’s population by 2026, China will remain one of the world’s largest economic powerhouses regardless.

It is estimated, however, that the population of China will drop below one billion people by the year 2100—bumping the nation to third place in the ranking of the world’s most populous countries. At the same time, it’s possible that China’s economic dominance may be challenged by these same demographic tailwinds as time moves forward.

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