‘Buffett Indicator’ for stock valuation passes 200%, beyond level he once said is ‘playing with fire’
How does the overall US stock market valuation shape up? Berkshire Hathaway CEO — and self-made billionaire investor — Warren Buffett has a long history of getting stock valuations right.
In 2001, in a Fortune magazine interview, Buffett spoke about the market-cap-to-GDP ratio. It compares the total value of companies on the US stock market to the nation’s gross domestic product (GDP).
He called it “probably the best single measure of where valuations stand at any given moment.” And it’s since become widely known as the Buffett Indicator.
The long-term average, going back to the 1970s, comes out at 85%. By mid-September 2025, it had soared as high as 218%. The US stock market is now valued at more than twice the country’s entire GDP.
