S&P 500 Intrinsic Value Index AKA Buffett Index Update

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Warren Buffett was extensively interviewed on CNBC yesterday morning. Here is the link to these interviews: Warren Buffett CNBC Interviews Wed Oct 16, 2013 If you have the time to listen, I strongly recommend that you do so. His historical perspective and investment performance remain outstanding and his advice has always proven prescient.

 

In one video segment he recommended that investors buy stocks during the current market turmoil: CNBC Interview Warren Buffett-Buy Stocks Today He announced he had just purchased for $1.1bil a UK vending  machine  company, had spent more than $20bil on acquisitions in 2013 and expected to spend many billions more.

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His advice and his own investment decisions are not dependent on when the resolution to the current government shutdown and debt discussions occur. He does not and never has timed short term market events. He does however use the major market corrections as buying opportunities and he remains a buyer today. Buffett and other Value Investors have this same historical pattern which I translated into a market valuation benchmark which I call the SP500 Intrinsic Value Index. The SP500 (.INX) remains below this index today by ~10%. I show the historical relationship between this benchmark and the SP500 in the chart below.