Title: Warren Buffett value indicator vs. GDP size - is the relationship superlinear?
Authors: Yu Sang Chang; Dohyun Pak
Department of Management, Gachon Center of Convergence Research, Gachon University, 1342 Seongnamdaero, Sujeong-gu, Seongnam-si, Gyeonggi-do 461-701, Korea
Department of Financial Mathematics, Gachon Business School, Gachon University, 1342 Seongnamdaero, Sujeong-gu, Seongnam-si, Gyeonggi-do 461-701, Korea
Abstract: Warren Buffett value indicator or Buffett indicator is the ratio of financial capitalisation to GDP for a given time for a country. Buffett indicator is used as a buy or sell signal to many investors around the world. This paper attempts to determine whether the scaling relationship may exist for Buffett indicator among different groups of countries. If such scaling relationship exists, the traditional use of Buffett indicator can be refined to seek better candidate countries for investment. Our analysis indicates that superlinear scaling relationship exists for total of 34 countries during the period of 1997 to 2014. Superlinear relationship exists also for the subgroups of 12 and 13 countries, but not for the subgroup of nine countries. Implication from our findings for international investment will be discussed.
Keywords: Warren Buffett value indicator; WBVI; Buffett indicator; superlinear relation; international investment.
Int. J. of Economics and Business Research, 2018 Vol.15, No.2, pp.223 - 235
Submission date: 02 Feb 2017
Date of acceptance: 04 Mar 2017
Available online: 12 Jan 2018