The Buffett Indicator (total U.S. stock market cap-to-GDP) has soared to ~219% in 2025, far above prior peaks during the dot-com and housing bubbles, and well beyond its historical average (~86%)
When I spoke to a couple of people regarding this subject, they took suggested that maybe this disparity in pricing between the market valuation and our GDP is a new normal. I think a better valuationfor today would be against the productivity of the USA and the total MARKET cap! At least as we are building the data centers necessary for the 4th industrial revolution with AI and robots!
At the same time as i stated in the article we could see prices move sideways while we wait for USA GDP to catch up. I think this is less likely mainly because whenever price dips, it has been immediately bought back up.
I also think these Volatile swings are the new normal. Derivatives are driving liquidations. Most Retail traders don't understand the level of risk exposure they are taking on when using derivatives. Which when combined with institutions who do understand how to use derivatives properly, is a large driving force in the extreme volatility and the exponentially larger swings in price that we are seeing in all markets these days.
Couldn't agree more. What if this market-to-GDP disconnect isn't just a bubble but a new, more volatile normal? This analsis is so good.
Thank you! I appreciate your kind words!
When I spoke to a couple of people regarding this subject, they took suggested that maybe this disparity in pricing between the market valuation and our GDP is a new normal. I think a better valuationfor today would be against the productivity of the USA and the total MARKET cap! At least as we are building the data centers necessary for the 4th industrial revolution with AI and robots!
At the same time as i stated in the article we could see prices move sideways while we wait for USA GDP to catch up. I think this is less likely mainly because whenever price dips, it has been immediately bought back up.
I also think these Volatile swings are the new normal. Derivatives are driving liquidations. Most Retail traders don't understand the level of risk exposure they are taking on when using derivatives. Which when combined with institutions who do understand how to use derivatives properly, is a large driving force in the extreme volatility and the exponentially larger swings in price that we are seeing in all markets these days.