Jan

21

Buffet Indicator

Used to be like sub 50pc in the 1990 and now well over 200pc. Not meant to be of any value for speculation (would have been rubbish in the past and don't think any value for future). but one wonders what it does in terms of tension (internal/ external) as we as shareholders would not like to give back gains so easily (and there is the drift etc). Tricks to be used to keep it up - see v recent events- not judging here.

Larry Williams offers a chart:

Big Al wonders:

I wonder to what extent the decline in "Stock Market Total Value Traded to GDP" reflects a shift to dark-pool/off-exchange trading.

Peter Ringel writes:

TY Larry, great data! looks like we are severely undervalued. A 90s style party is coming.

@BigAl this too is a valid point. If founders don't go the exchanges anymore. Is there data on this off-exchange size? At least for their exit they will most likely show up in equities. Why should early backers not do this in the end? Its too juicy.

related: If off-exchange sector really gets dominant, then FED policy becomes even more toothless.
They have no tools to influence this.

Big Al asks Gemini:

In the US, how much stock trading occurs in dark pools or otherwise off exchanges?

Over 50% of all U.S. stock trading volume now occurs off-exchange, in venues such as dark pools and through internalizers at major firms, exceeding the volume on public exchanges for the first time in early 2025.

Overall Off-Exchange Volume: While dark pools specifically account for a smaller portion of the off-exchange activity (around 13% of consolidated turnover), the overall off-exchange market, including internalizers and bilateral trades, accounts for the majority of U.S. equity trading volume.

Purpose of Dark Pools: Dark pools and other off-exchange venues are primarily used by large institutional investors to execute big orders anonymously, which helps them avoid significant market impact and predatory high-frequency trading (HFT) strategies that can occur on public "lit" exchanges.

Regulatory Oversight: Despite their name, dark pools are regulated as Alternative Trading Systems (ATS) by the SEC and must report executed trades to regulators like the FINRA on a delayed basis.

Market Share Trends: Off-exchange trading share has been on a general upward trend for years, driven by the desire for better execution quality and anonymity. This shift has implications for traditional price discovery on public exchanges.

Steve Ellison does some analysis:

The Shiller Cyclically Adjusted Price Earnings (CAPE) ratio is at its second highest level in history, exceeded only in 1999-2000. What I find interesting is that the 30-year moving average of this ratio has nearly doubled since 1990. My theory is that permanently lower interest rates in an aging population support generally higher stock valuations than in past eras when large families were the norm.

And in the spirit of the old Spec List, here is the Python code I used (.text file) to generate this graph.

Big Al adds:

Another issue is the effect of Mag7 stocks which are global in a new way, beyond US GDP.


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