maandag 18 mei 2015

James Tobin: Q Ratio

The Q ratio of James Tobin is the ratio between the total value of stocks and the total value of underlying assets such as plants, inventory and equipment.

When this ratio goes above 1, stocks are overvalued. A rising ratio indicates that money isn't going into developing plant and equipment. Instead we have an engineered equity bubble forming.

For more info, go to this Zerohedge article.

As of 2015, we are clearly overvalued and a correction will be a matter of time.

1 opmerking:

  1. prof premraj pushpakaran writes -- 2018 marks the 100th birth year of James Tobin!!!