Warren Buffett's favorite valuation metric. When this ratio spikes above 100%, history shows the market is living on borrowed time. Are you prepared?
Market capitalization to GDP ratio. Warren Buffett's preferred valuation metric for the overall stock market.
Thresholds: Negative >150 • Warning ≥120 • Positive <120
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The Buffett Indicator divides total US stock market capitalization by gross domestic product (GDP). Warren Buffett described it as "probably the best single measure of where valuations stand at any given moment."
How It's Calculated:
Signal Thresholds:
The Buffett Indicator has flagged every major market bubble in modern history. Before the 2000 dot-com crash it hit 146%. Before the 2008 financial crisis it reached 109%. Each time investors who ignored the warning paid dearly.
Dot-Com Peak (2000)
Buffett Indicator hit 146% — the highest reading in history at the time. NASDAQ lost 78% over the next 2.5 years.
Financial Crisis (2007)
Reached 109% before the S&P 500 fell 57%. The ratio didn't return to normal until 2009.
COVID Crash (2020)
Was at 152% before the fastest bear market in history. Massive stimulus drove a rapid recovery.
No single indicator is perfect. The Buffett Indicator has structural biases — US companies earn significant revenue overseas (inflating market cap relative to domestic GDP), and interest rates affect fair valuation levels. Use it alongside other metrics for a complete picture.
Yield Curve
Treasury 10Y-2Y spread — the #1 recession predictor since 1950
Shiller PE Ratio
Cyclically adjusted PE — 10-year smoothed valuation metric
Recession Probability
Combined crash risk and recession forecast for 2026
Market Crash Indicators
All 3 crash prediction signals on one dashboard
Economic Indicators Guide
Complete guide to every metric we track
Market Analysis
Recession prediction models and historical crash analysis
The Buffett Indicator is provided for educational purposes only. Not investment advice. Past performance does not guarantee future results.