The Buffett Indicator compares the total market capitalization of equities to GDP, effectively a macro P/E ratio. On January 1, 2025 the measure for the U.S. stood at 203, more than two standard deviations from its historical average and above its level of 146 just before the bursting of the speculative bubble in 2000. Buffet was culling his stock positions at the time, particularly tech and banks, but keep in mind that these firms account for a good proportion of the value-weighted S&P 500 index and were the stocks that looked pricy. The Buffett Indicator is for the passive index investor buying the market, not for those looking for price versus value in individual stocks.
Here is some history for the Buffet Indicator at December 31 each year:
| Year | Value |
|---|---|
| 2024 | 203 |
| 2023 | 161 |
| 2022 | 158 |
| 2021 | 216 |
| 2020 | 130 |
| 2015 | 140 |
| 2007 | 120 |
| 2008 | 90 |