The Buffett Indicator—the ratio of total U.S. stock market capitalization to GDP—is signaling potential instability. Warren Buffett first detailed the metric in 2001, arguing that while a ratio of 70% to 80% represents a buying opportunity, levels approaching 200% suggest investors are "playing with fire." During the dot-com bubble, the S&P 500 retreated nearly 50% after the indicator peaked. Analysis suggests the yardstick looks even more ominous today than it did during previous periods of market volatility.
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Source · Fortune
