PremiumA week ago, Kamath advised for all those who are confused when to buy stocks to follow the Buffett Indicator – the ratio of the GDP to the US stock market cap.
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Zerodha founder and CEO Nithin Kamath on 25 August suggested in offline wealth management, overselling is par for the course.
Sharing his thoughts, he took to Twitter and wrote, "In offline wealth management, overselling is par for the course. Since these conversations don't leave a trail, overselling isn't spotted—this is why conversion is better. Digital platforms cannot do the same because it leaves a trail & this is why I think they haven't scaled."
A week ago, Kamath advised for all those who are confused when to buy stocks to follow the Buffett Indicator – the ratio of the GDP to the US stock market market cap.
The the formula is US centric, it is made in a way that it may be used for any nation.
For making it India centric, investors need to divide the present market cap of the Indian stock market and divide it by the GDP and find out the percentage of it. If the percentage is between 75 and 90, it is considered that the market is fairly valued. Anything above 90 indicates that the market is overpriced and, when it goes below 75, it shows the market is undervalued. And, that’s the perfect time to buy stocks.
The Zerodha CEO also shared a chart along with his tweet that says: “To the people looking for stock tips, wait for the Blue zone and buy anything; stick to nifty constituents...Everything is cyclical."
As per the chart, he ratio for India's FY23 stands at 103%, which indicates that the market is now overvalued.
The chart also demonstrates that the market remained materially undervalued in FY09, during the recession, and in FY20, during which the country was severely affected by the coronavirus epidemic. Since FY20, the market has remained overvalued.