Do you know the legendary investor Warren Buffet swears by the market cap to GDP ratio? In fact, he once famously said that it is probably the single best measure of valuations at any point. Instead of looking for tips from some talking heads, investors can take a look at some historical data and find the relationship between them to make their buy and sell decisions with better conviction. In fact, most market pundits like Buffet have their own favourite ratios. They like to use them often to get an idea of the valuations. All you have to do is to find out these key numbers and follow the general rule to figure out what they indicate. You would be surprised how clearly they indicate the valuations in the market. We have highlighted some important pointers which will help you get an idea of the market valuations.
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