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The Warren Buffett Indicator compares the total value of the U.S. stock market with the size of the U.S. economy. It divides the market value of all U.S. corporate equities by gross domestic product (GDP). Warren Buffett called it “probably the best single measure of where valuations stand at any given moment” in a 2001 interview with Fortune.
We use the Wilshire 5000 Total Market Index, which measures the value of every U.S. stock, divided by nominal GDP from the Bureau of Economic Analysis (published through FRED). This is the definition Warren Buffett described, and the one most published versions of the indicator use, so the number here matches what you will find elsewhere. The Wilshire 5000 is published once a day after the close, and the numbers refresh through the trading day.
Below 75% has historically meant stocks were cheap relative to the economy. Around 90% is close to fair value. Above 115% suggests stocks are significantly overvalued. The average since 1989 is about 110%, and the peaks of 2000, 2007 and 2021 all came well above that line.
When stocks are priced far above the economy that supports them, a portfolio held mostly in equities carries more downside risk. Many investors respond by diversifying into physical gold and silver, which have often moved differently from stocks. Our free Gold IRA Guide explains how that works inside a retirement account.
This tool is for educational purposes only and is not investment advice. Past performance does not guarantee future results.