US Stock Valuations Hit Record Highs as Buffett Indicator Signals Overheating
The US stock market has reached unprecedented valuation levels, with the Warren Buffett Indicator—measuring total market capitalization against GDP—soaring to 212%. This surpasses previous peaks during the Dot-Com Bubble and 2008 Financial Crisis. The Wilshire 5000 Total Market Index now reflects a market cap more than double the nation's economic output.
Warren Buffett famously warned that ratios approaching 200% indicate investors are 'playing with fire.' Berkshire Hathaway has been reducing equity exposure since 2025, including a complete exit from Citigroup positions. The moves suggest the Oracle of Omaha is heeding his own metric's warning.