Buffett Indicator

What it is

The ratio of total U.S. stock market capitalization to GDP, popularized by Warren Buffett as a broad valuation gauge. Currently calculated as the FT Wilshire 5000 index level (a proxy for total U.S. market cap) divided by the latest available quarterly U.S. nominal GDP from FRED.

Why it matters

Higher ratios suggest equities are expensive relative to the underlying economy. Very high readings have historically coincided with stretched valuations.

How to read it here

• Green: ratio ≤ 100% — market cap broadly in line with GDP
• Yellow: 100% < ratio ≤ 150% — elevated valuation relative to economic output
• Red: ratio > 150% — significantly elevated, historically associated with high-valuation environments
• This is a long-horizon valuation signal, not a short-term timing tool
• Current source (from 2026-04-03): FT Wilshire 5000 daily index (Yahoo Finance) ÷ latest released quarterly GDP (FRED series GDP). GDP denominator updates quarterly; the ratio reflects daily market moves against the most recent official GDP reading.