Warren Buffett's Favorite Valuation Indicator Blew Past the Level He Warned Was "Playing With Fire." Here Are 3 Stocks Still Cheap Enough to Buy.
What's the best valuation metric for the stock market? Warren Buffett weighed in with his answer years ago. The legendary investor wrote in a 2001 Fortune article that the ratio of total market capitalization to gross national product (GNP), which is now typically replaced by gross domestic product (GDP), is "probably the best single measure of where valuations stand at any given moment." This ratio became so associated with him that it was nicknamed the "Buffett indicator." Buffett also warned 25 years ago that when this ratio approaches 200% (as it did in late 1999 and early 2000), investors are "playing with fire." And that brings us to today, with the Buffett indicator at 235.8%, slightly below its record high set in September 2026. Continue reading