Buffett's favorite indicator, which predicted the global financial crisis and the collapse of the dot-com bubble, has reached 205%.
This level signals that the stock price is too high and there is a risk of a market collapse, writes Business Insider.
The "Buffett indicator," according to the head of Berkshire Hathaway, is the "best and only" indicator of the market's value. "If that ratio drops to 70% or 80% as a percentage, then buying shares now is probably a good deal.
"If the ratio approaches 200%, as it did in 1999 and parts of 2000, then you're playing with fire," Buffett explained in a 2001 Fortune article.
VENTURE | 1881
