What Is the Buffett Indicator? Market Cap to GDP
The Buffett Indicator is the total value of a country's stocks divided by its GDP. Warren Buffett told Fortune in 2001 it was probably the best single measure of where valuations stand. This site's version, built from the 294 stocks it tracks, reads 197% in October 2026, and the Federal Reserve's equity data gives 255%, far above its levels of 163% around 2000 and 115% around 2007. The indicator says nothing about timing.
How is the Buffett Indicator calculated?
Buffett Indicator = total market value of stocks ÷ GDP × 100
It compares what the market says all companies are worth with the size of the economy that produces their sales. Buffett's own rule of thumb in that article was that buying when the ratio sat around 70% to 80% was likely to work well, and that a ratio approaching 200%, as in 1999 and 2000, meant playing with fire. This site's Minsky model treats 150% or more as a fragility signal. Read the glossary entry.
This site's reading: 64.0 trillion dollars of tracked market value divided by 32.6 trillion dollars of GDP (second quarter of 2026) is 197%.
Why do different sources give different readings?
The numerator and the denominator both change between sources, so the levels are not interchangeable:
| Version | Numerator | Reading now |
|---|---|---|
| This site's Crash Indicator | Market value of the 294 large US stocks it tracks | 197% |
| Federal Reserve data (Z.1) | Market value of nonfinancial corporate equities | 255% |
| Wilshire 5000 versions | A broad index of nearly all US-listed stocks | Published elsewhere; usually higher than a 500-stock set |
The trend is more reliable than any single level. The Fed's series is the longest free history:
US nonfinancial corporate equity value divided by GDP, quarterly (Federal Reserve Z.1 and BEA via FRED).
What are the limits of the Buffett Indicator?
- Earnings abroad: large US companies earn a growing share of profit outside the US, so a US-GDP denominator understates what they can earn.
- Interest rates and margins: lower rates and higher profit margins can justify a higher ratio than the past average.
- Composition: today's market leans on a few very profitable companies, which the ratio ignores.
- Timing: the ratio rose for years before 2000, so a high reading is a statement about valuation, not about when it ends.
That is why this site shows it next to 25 other indicators, never as a single signal. See the bubble comparison with 2000 and 2007.
Buffett Indicator FAQ
What is the Buffett Indicator today?
On this site's version it is 197% (tracked market value of 64.0 trillion dollars over GDP of 32.6 trillion). On the Federal Reserve's nonfinancial-equity version it is 255%.
Is the Buffett Indicator accurate?
It describes valuation well and timing badly. High readings have gone with weak long-run returns, but markets have stayed expensive for years, so it cannot say when a decline will start.
Why does it differ from other websites?
Sources use different measures of total market value, such as the Wilshire 5000, the Fed's equity data or a fixed set of large stocks, and different GDP releases. Compare a source with its own history, not with another source's number.
Does a high Buffett Indicator mean a crash is coming?
No. It means stocks are expensive relative to the economy. Crashes need a trigger such as credit stress or a jump in unemployment, which other indicators on the Crash Indicator page track.
Where can I see it on this site?
On the Crash Indicator page, where the reading is refreshed weekly next to the CAPE, the equity risk premium and the credit indicators.