This Indicator Is Predicting A Market Correction
The Tobin’s Q ratio, a measure of market valuation, is currently at an all-time high of 1.926, indicating that the U.S. stock market may be overvalued. This ratio compares the market value of equities to their replacement cost, with a value of 1 suggesting equilibrium. While peaks in the Tobin’s Q ratio correlate with market volatility, it may not reliably predict market corrections. The data is sourced from the Z.1 Flow of Funds Report and analyzed by Lucas Juery, CFA, CFPⓇ.
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