Buffett’s go-to market yardstick is suggesting a high risk of a downturn

Warren Buffett’s market gauge hit 211%, signaling stocks are too expensive.

The Buffett indicator spiking is a “very strong warning signal,” the investor said in 2001.

Buying stocks when the gauge approaches 200% is “playing with fire,” Buffett said.

The “Buffett indicator” takes the combined market capitalization of all actively traded US stocks, and divides it by the latest quarterly figure for gross domestic product.

The Wilshire 5000 Total Market Index hit a new intraday high of $48.99 trillion on Tuesday, following record closes for the Dow Jones and S&P 500 indexes on Monday.

Meanwhile, the latest estimate for third-quarter GDP is $23.20 trillion, putting the Buffett indicator at 211%.