The Buffett Valuation Indicator

Thanks to Warren Buffett, Market Cap to GDP has become a common long-term valuation metric in recent years. Back in 2001, he remarked in a Fortune Magazine interview that “it is probably the best single measure of where valuations stand at any given moment.”

The odd numerator in the chart title, NCBEILQ027S, is the FRED classification for Line 62 in the F.103 balance sheet of Table S.5.q of the Federal Reserve’s ‘Integrated Macroeconomic Accounts for the United States’ (Market Value of Equities Outstanding).