"Buffett Indicator Indicates a Problem As investors, one of our most important jobs is to judge when stocks become overvalued and it’s time to start taking profits.Throughout his remarkable career, Warren Buffett built up an arsenal of tools he uses to maximize returns. This is the purpose of Warren’s favorite valuation metric, known as the Buffett Indicator. This is simply a ratio between the size of the American economy and the size of the stock market.When the stock market becomes substantially larger than the underlying economy (as measured by GDP), Buffett noticed that this indicated stocks were becoming relatively expensive.
....the post-COVID era, the Buffett Indicator has soared to new all-time highs. We are currently around 190%. This indicates that the market sits at extreme price levels.It’s hard for me to look at today’s valuations and see anything but a bubble."
