Buffett Indicator Hits Record High, Signaling Overvaluation in U.S. Stocks

The so-called Buffett Indicator, a key metric favored by Warren Buffett to gauge stock market valuations, has surged to an all-time high of 216.8%. This ratio, which compares the total market capitalization of U.S. stocks to GDP, far exceeds its historical average of 85% since 1970. Including private companies pushes the figure to an even more staggering 328.7%, raising red flags about unsustainable market levels.

Despite poor seasonal trends and mounting valuation concerns, the S&P 500 has defied expectations with a 3.2% gain this September. The index hasn't experienced a 2% drawdown in 107 trading sessions—the longest such streak since July 2024. "Investors continue to shrug off negative signals, but complacency could threaten this rally," warns Kayne Anderson Rudnick's Julie Biel.