Veteran investor Jeremy Grantham warned that the U.S. stock market is at its most expensive valuation in history, saying the Buffett Indicator stands at 235% of GDP, a level that rivals or exceeds the dot-com bubble peak.
Market Cap Eclipses Economy
“Based on the value of the stock market compared to GDP, with modifications, this is the most expensive market in American history,” the Boston-based GMO co-founder told CNBC’s “Squawk Box.”
The market-cap-to-GDP ratio, tracked by Longtermtrends.com, shows the total value of the U.S. stock market now exceeds twice the size of the U.S. economy.
Warren Buffett previously warned that when the ratio approaches 200%, as it did in 1999 and part of 2000, "you are playing with fire."
