Buffett Indicator Flashes Warning Signs for Stocks

Warren Buffett's favorite valuation metric, the "Buffett Indicator," shows stocks are significantly overvalued at 184% of GDP and could crash

The indicator divides the total market capitalization of U.S. stocks by quarterly GDP to assess if stocks are over or undervalued

Buffett warned that readings near 200% signaled stocks were dangerously overvalued, like during the dot-com bubble

The indicator flashed red early in 2022 when it rose over 200%, foreshadowing the market slide that followed

Some experts point to the indicator's current high level as a sign that stocks are in a bubble that could soon pop