The Buffett Indicator
A common and well accepted measurement for market pricing is known appropriately as the Buffett Indicator since Warren Buffett created this ratio to analyze stock pricing (or overpricing.) It is a measurement of the total Market Cap of all US publicly traded companies against GDP. When this number exceeds 100%, the market is thought to be overpriced. This ratio hit 145% before the Dot.com bubble, and 110% before the financial crisis on 2008. Currently this ratio is 157%. We see this as a problem. Also a good reason why Warren Buffett’s company, Berkshire Hathaway, is holding more cash than ever.
Seeking Value 