Warren Buffett’s market-cap-to-GDP ratio reaches 229.7%, exceeding his 200% threshold for overvaluation risks.
The Buffett indicator, a ratio of total U.S. market capitalization to GDP, has climbed to 229.7% as of May 2026. Warren Buffett previously identified 200% as a danger zone for overvaluation, citing historical precedents like the 1999-2000 dot-com bubble.
The metric, created by Buffett, suggests valuations between 70-80% signal buying opportunities, while 100% is neutral. Levels above 200% have historically preceded market corrections. The current reading marks the highest sustained period above this threshold since the early 2020s.
Berkshire Hathaway’s large cash reserves align with Buffett’s cautious stance on elevated valuations, though the indicator does not predict timing for potential downturns.