LemonTradesWarren Buffett’s stock market warning
The market measure Buffett once called “probably the best single measure of where valuations stand,” live, and what he and Berkshire Hathaway have been doing about it.
- S&P 500
- 7,660.91 −1.24%
- Berkshire (BRK.B)
- $547.28 +1.19%
- 10-year yield
- 4.953%
The indicator through history
| 2000, dot-com peak | about 140% |
| 2009, financial-crisis low | about 60% |
| 2021, after the pandemic rally | about 200% |
| Today | 237% |
Approximate readings using the same method: the Wilshire 5000 total market index against GDP. Buffett’s own measure, built from Fed data against GNP, put 1999–2000 closer to 200%; different measures differ by tens of points, so compare readings from the same method.
What Buffett said
In a 2001 interview with Fortune, after the dot-com crash, Buffett said the total value of US stocks against the size of the economy is “probably the best single measure of where valuations stand at any given moment.” Readings near 70% to 80% looked attractive to him; near 200%, he said, investors are “playing with fire.”
What Berkshire has been doing
- A record cash pile: $397.4 billion at the end of March 2026, falling to $365.5 billion by June as Berkshire put money to work.
- Years of net selling: Berkshire sold more stock than it bought for 14 quarters in a row, until Greg Abel turned a net buyer in the second quarter of 2026.
- New leadership: Buffett handed the CEO job to Abel at the end of 2025; at the 2026 annual meeting Abel said prices weren’t right for buying good companies at that time.
Commentators read the cash pile as a warning about valuations; Buffett himself has never forecast a crash, and he wrote in his final letter that Berkshire will never prefer cash to owning good businesses.
What the indicator misses
- US companies earn much of their profit abroad, which GDP doesn’t count.
- Lower interest rates and higher profit margins can justify a higher ratio than in the past.
- It’s not a timing tool: it stayed above its old records for most of the 2020s while stocks kept rising.
Questions
What is the Buffett indicator right now?
About 237%, live at the top of this page, far above anything before 2021.
Did Warren Buffett warn of a stock market crash?
Not in so many words. The “warning” people point to is Berkshire’s record cash pile and years of net selling, and Buffett’s comments on valuations.
What’s a normal Buffett indicator?
Over the last 50 years it has averaged roughly 80% to 100% on this method; well above that, stocks are expensive against the economy by this measure.
Sources: CNBC: Berkshire Q2 2026 · The Motley Fool: Berkshire’s $397 billion cash · Moody’s: US nominal GDP
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