Broad valuation metric comparing total equity value to the economy.
Often called the "Buffett Indicator," this ratio compares the total value of the US stock market to the Gross Domestic Product, offering a macro view of valuation levels.
Divides the Wilshire 5000 Total Market Index by US GDP. A ratio of 100% implies parity between financial asset values and economic output.
Ratios below 80% have historically presented favorable long-term entry points.
80-100% represents valuations consistent with historical averages.
Ratios above 140% suggest valuations have outpaced economic output significantly.
Peaked near 190% in 2021 and dropped to ~50% in 2009. The long-term trend has drifted higher due to globalization and technology margins.
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