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IPFS News Link • Stock Market

This Favorite Warren Buffett Metric Tells Us a Stock Market Crash Could Be Coming

• https://www.msn.com, by Matthew Frankel

However, Buffett himself has mentioned one specific metric as the best indicator of stock valuations, and it has appropriately been nicknamed the "Buffett Indicator" in the investing community. Here's what the Buffett Indicator is, and why it may be signaling that the stock market is a bit overheated.

This is a metric that Buffett uses to get an overall feel for the valuation of U.S. stocks. In fact, he described it as "the best single measure of where valuations stand at any given moment" in a 2001 interview with Fortune Magazine.

It's a fairly simple metric to calculate, too. Just divide the total market capitalization of all U.S. stocks by the latest gross domestic product (GDP).


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