The “Warren Buffett Indicator” is a simple yardstick that compares the total U.S. stock market’s value to the size of the U.S. economy. It’s recently surged above 200% , a level Buffett once warned is like “playing with fire,” signaling stretched valuations versus economic output. It’s soared because market values have risen far faster than GDP , driven by mega-cap gains and optimism, pushing the ratio to roughly 217%—well above long-term norms and prior peaks—suggesting elevated risk if profits or growth don’t keep up.

What the Indicator is

It’s the ratio of total U.S. stock market capitalization (often proxied by the Wilshire 5000) divided by U.S. GDP, giving a quick read on whether stocks look expensive relative to the economy’s size.

Buffett popularized it two decades ago, calli

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