Data sources:
GuruFocus has their own page on this and use their own methodology which you can compare against https://www.gurufocus.com/global-market-valuation.php?country=AUS
To be clear
Valuations are not a market timing tool.
Valuations don’t provide good info on the path of future short/medium term (1-3y) returns.
Valuations tend to be very good at providing info on path of future long term (5-12y) returns.
Just because valuations are cheap does not mean they cannot get cheaper in the short/medium term.
Just because valuations are expensive does not mean they cannot get more expensive in the short/medium term.
Total Market Cap/GDP is just one of many valuation ratios which are really just a short-hand way to express the present value of future cash flows.
Using the most recent released numbers of Sep 2020 Market Cap and Sep 2020 GDP we are at ~100 TMC/GDP:
According to the Nov 2020 RBA Statement on Monetary Policy they forecast Dec 2020 GDP to be a -4% YoY from Dec 2019:
https://www.rba.gov.au/publications/smp/2020/nov/economic-outlook.html (see Table 6.1)
So using 0.96*Dec 2019 GDP and Nov 2020 Market Cap to impute a Dec 2020 forecast for TMC/GDP puts us at ~113% TMC/GDP, in line with GuruFocus numbers.
This is just a forecast for that value and we won’t know for sure until Dec 2020 GDP and TMC numbers are released, but probably pretty close.
Which means we have gone from valuations in March equal to the 2002, 2008, 2011 bottoms (cheap and associated with strong forward long term returns) to valuations today equal to 2007 (expensive and associated with weak forward long term returns).
GuruFocus currently has their TMC/GDP at ~113%, so make of that what you will.
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