Stock Analysis Dashboard

What it is: The Buffett Indicator divides the total market capitalisation of all US stocks by the US GDP. It was popularised by Warren Buffett, who called it "probably the best single measure of where valuations stand at any given moment."

• Why it matters: It puts the stock market in context of the real economy. When stocks grow far faster than the economy, it can signal that prices have become disconnected from underlying fundamentals.
• How to read it: Below 80% is historically undervalued. Around 100% is fair value. Above 120–140% is considered overvalued. Above 180% signals significant excess.
• Limitation: Does not account for interest rates or globalisation of corporate earnings — US companies now earn a large share of profits overseas, which can make the ratio appear structurally higher than in past decades.

What it is: The Cyclically Adjusted Price-to-Earnings ratio (CAPE), also known as the Shiller P/E or P/E 10, divides the S&P 500 price by the average inflation-adjusted earnings over the past 10 years. Developed by Nobel laureate Robert Shiller.

• Why it matters: A regular P/E ratio can be distorted by one-off earnings spikes or crashes. Averaging 10 years of earnings smooths out the business cycle, giving a more stable long-run picture of whether stocks are cheap or expensive.
• How to read it: The long-run average is around 17. Below 15 is historically cheap. Between 17–25 is fair to slightly elevated. Above 30 has historically preceded major market corrections (e.g. 1929, dot-com bubble, 2021).
• Limitation: Can stay elevated for extended periods during low interest rate environments. Some argue the "fair value" level has shifted higher in recent decades due to structurally lower rates.

What it is: The Wilshire 5000 / GDP ratio is similar to the Buffett Indicator but uses the Wilshire 5000 Full-Cap Index — which tracks all publicly traded US stocks — as the market cap proxy, rather than the Federal Reserve flow-of-funds data.

• Why it matters: The Wilshire 5000 is the broadest measure of the US equity market, covering over 3,500 stocks. Comparing it to GDP reveals how stretched overall market prices are relative to the productive capacity of the economy.
• How to read it: The historical average sits around 80–100%. Readings significantly above the average (e.g. 150%+) suggest the market may be running ahead of economic fundamentals. A rising trend over time indicates stocks are growing faster than the economy.
• Limitation: Like the Buffett Indicator, it does not directly adjust for interest rates. Low borrowing costs tend to push valuations higher, as future earnings are discounted less aggressively.