What is the Warren Buffett Indicator?

The Warren Buffett Indicator measures the ratio of a country's total stock market value to its GDP. It is used to evaluate long-term market valuation and systemic risk.

How accurate is the Buffett Indicator?

While not a short-term prediction tool, the Buffett Indicator has historically provided strong long-term warnings of market overvaluation and bubble conditions.

Buffett Indicator Today — Updated Market Valuation & Crash Risk

Q: Is the stock market overvalued today?

The Buffett Indicator compares total market capitalization to GDP. When the ratio exceeds 120–150%, it often signals overvaluation. Extremely high readings above 180–200% have historically preceded market bubbles and corrections.

Q: Will the stock market crash?

The Buffett Indicator does not time crashes, but historically extreme values appeared before major declines such as the Dot-com Bubble and the 2008 Financial Crisis.

Updated on 2025-12-23. The Buffett Indicator (Market Cap to GDP Ratio) is one of Warren Buffett’s favorite long-term valuation tools — widely used to assess whether the U.S. stock market is overvalued, fairly valued, or at risk of a bubble.

Current Buffett Indicator: 215.599%

Is the Stock Market Overvalued Today?

Based on today’s Buffett Indicator reading of 215.599%, the U.S. stock market is currently assessed as: Significantly Overvalued.

Buffett Indicator Chart — Historical Market Valuation (1M / 3M / 5Y)

Explore changes in the Buffett Indicator over multiple time ranges to track trends and bubble cycles.

Buffett Indicator

Last 3M

Data Source: FRED

Will the Stock Market Crash?

The Buffett Indicator does not predict short-term market movements, but extremely elevated readings have historically preceded major corrections:

2000 (Dot-com Bubble): Buffett Indicator ~150%
2008 (Financial Crisis): Elevated pre-crash
2021 (Tech Peak): Buffett Indicator exceeding 200%

Persistent overvaluation increases systemic risk, especially when combined with rising interest rates, tightening liquidity, or weakening earnings.

Warren Buffett Indicator Explained

The Warren Buffett Indicator measures the ratio of total market capitalization to GDP. Buffett has called it “the best single measure of where valuations stand.” Values above 120–150% historically suggest market overvaluation.

Full Explanation: Methodology, Bubbles & Investment Use

1. How It Works

The indicator compares total market cap with GDP, acting as a macro-level valuation gauge.

2. Why It Matters

It has historically warned of bubbles before major crises.

3. How to Use It

Useful for long-term investing, not short-term timing.