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What the Buffett Indicator says about the stock market right now

Yahoo Finance's Akiko Fujita discusses a chart showing the Buffett Indicator, named after Berkshire Hathaway's Warren Buffett, reaching a key level.

Video Transcript

[MUSIC PLAYING]

AKIKO FUJITA: Now time for our Chart of the Day, and a valuation indicator you should check on, this chart from realinvestmentadvice.com shows key levels on the Buffett indicator, named, of course, after the Oracle of Omaha. It shows the ratio of the US stock market's total market cap to domestic GDP.

The indicator currently sits at around 2.44 times market cap to GDP, thanks, of course, to the everything rally. Even despite the recent selloff we have seen, it's still really high historically. To put it into perspective, when the dot com bubble burst back in 2000, the indicator was at 2.11. Certainly don't want to get to that level.