The Warren Buffett Indicator

What is the Buffett Indicator?

The Buffett Indicator is the ratio of total US stock market value to GDP (Gross Domestic Product). It is used to assess whether the stock market is overvalued or undervalued.

Current Values (As of December 2, 2024)

Market Capitalization: $60.88 Trillion

GDP: $29.35 Trillion

Buffett Indicator Ratio: 207%

Historical Insights

Low of 33% in 1953
High of 202% in February 2021
Average ratio historically around 100%
Current ratio suggests the market is strongly overvalued

Why Does It Matter?

The Buffett Indicator helps investors gauge market valuations relative to economic output. A high ratio may indicate a potential market bubble, while a low ratio could suggest undervaluation.