Stocks are trading at some of the highest valuations in history. According to the Buffett Indicator, which compares total U.S. stock market capitalization to GDP, valuations sit at roughly 217%. That’s well above the 150% peak reached during the dot-com bubble.
Other metrics confirm the froth. The S&P 500 Index ($SPX) price-book ratio recently hit 5.46x, the highest on record and nearly double its long-term median. Meanwhile, Bank of America now flags the market as “statistically expensive” across all 20 of its tracked valuation metrics — a clean sweep that hasn’t occurred in decades. The firm also reports that 60% of its bear-market signposts are currently triggered, which is worryingly close to the 70% level that has marked previous market peaks.
