What is the Buffett index?

The Buffett Indicator (aka, Buffett Index, or Buffett Ratio) is the ratio of the total United States stock market to GDP. As of May 31, 2024 the ratio values are: This ratio fluctuates over time since the value of the stock market can be very volatile, but GDP tends to grow much more predictably.

What ratio does Warren Buffett use for market valuation?

These ratios can be applied to individual businesses, as well as the overall market. The ratio Warren Buffett uses for market valuation, TMC/GNP, is like a P/S ratio: In this case, the price is the total market cap of all stocks that are traded, and sales is the total gross national product of the country.

What is a Buffett indicator?

The Buffett Indicator is the ratio of total US stock market value divided by GDP. Named after Warren Buffett, who called the ratio "the best single measure of where valuations stand at any given moment".