Market context
In 2001 Buffett wrote that the market value of all stocks against the size of the economy was "probably the best single measure of where valuations stand at any given moment". Here it is, from the Federal Reserve's Z.1 accounts and GDP.
Market value / GDP
255%
As of 30 Jun 2026, quarter end
Long-run average
83%
since 1947
10-year Treasury
5.2%
As of 19 Oct 2026
Higher means investors are paying more for each dollar of economic output. It says little about next month and a fair amount about the next decade: from very high readings, long-run returns have tended to be poor. Interest rates matter too. Buffett compared them to gravity: the higher they are, the less any future earnings are worth today, which is why we show the Treasury yield beside it.
Two caveats. US companies earn far more abroad than they did decades ago, which pushes the ratio up without any change in value. And the indicator says nothing about individual businesses; expensive markets still contain cheap companies, just fewer of them.
Sources: Federal Reserve Z.1 Financial Accounts (NCBEILQ027S) and BEA GDP via FRED; US Treasury daily par yield curve.