Market analysis: is it time to worry about overvaluation?

Since March 2009, the SMI has gained more than 45% and the S&P 500 nearly 75%. We can therefore have some legitimate fears about the market value. Of course, we started from low levels, but these reflected the precarious state of global finance. Without the intervention of governments and central banks, this financial crisis would have had an even greater impact on the real economy. Currently, although we have come out of the recession, the economy remains very fragile.

The preferred indicator of market valuation Warren Buffett is the ratio of total market capitalization (TMC) to US GDP (GNP). The latter currently stands at 92.5%, which means that the market is moderately overvalued and, according to historical data, that it would produce from this valuation level an annual profitability of 4.6% (source: gurufocus.com). The signals of our portfolio are consistent with this indicator, since only 5 stocks out of 23 are in "buy" position, or 21.7%. Moreover, these are defensive stocks only.