
Warren Buffett's time-tested stock market valuation indicator reached an all-time high of 200% last week, surpassing a peak of 197% in November 2021. This implies that US stocks may be extremely overvalued. Shortly after the "Buffett Indicator" peaked in November 2021, the stock market entered a bear market.
The indicator divides the total market capitalisation of all US stocks by the most recent quarterly GDP estimate. According to a Fortune report, Buffett said the indicator, which compares the total stock market value to the national economy size, is "probably the best single measure of where valuations stand at any given moment."