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Warren Buffett created a ratio of the market value of all US publicly traded securities to Gross National Product (GNP) as a yardstick to measure stock market valuation

MyPlanIQ has been tracking this index and presents the current status. This will be reported every other week (bi-weekly)

On Dec 10, 2010, the ratio of the total stock market capitalization to GNP was 88%.

This compares to November 26, 2010, when the ratio was 84% which is in the fair market range.

click to enlarge images

The trend is clearly increasing as the appetite for equities remain -- especially in light of fixed income assets having a poor outlook.

The valuations are still in the fair market region, which would point to a continuing increase in the value of equities in the short term.

Source: The Buffett Ratio (Market Value to GNP) Increases