20 September 2022
The Buffett Indicator is a valuation measure that compares the stock market’s capitalization to the Gross Domestic Product. A favorite of Warren Buffett, the indicator sits shy of 2.44 times market-cap to GDP. That number doesn’t mean much on its own, but it’s striking when placed in a historical context. Even after the recent fall in markets, the ratio is still one of the highest on record, north of the 2.11 level recorded during the dot-com bubble of 2000, and considerably elevated compared to the average since 1950.