The famous Buffetta indicator, once the favorite measure of Warren Buffetta, used to assess the state of stock exchanges, reached a record level of 217%, exceeding both the peak of the dotcom bubble and the maximum from the pandemic period, which was 190%. The indicator compares the total value of listed American actions with the US national gross product, indicating the historical valuation of markets.
The Buffetta indicator suggests sales
Already in 2001, Buffett warned that when the indicator shows 200%, investors “play with fire”. Despite this – at 217% – we observe increases, which, however, are driven mainly by technology companies, valued at high multipliers in the context of huge investments in artificial intelligence.
The price/sales indicator for S&P 500 increased to a level 3.33, it is a historical value, exceeding the maximum achieved during the dotcom bubble (2.27) and from 2021 (3.21). The American market was in a place where it has never been before. So is it better to sell shares and wait for the crash?
It doesn’t matter anymore?
It is worth adding, however, that some analysts say that the indicator has already lost its importance, because the current US economy is less dependent on physical assets – innovation, intellectual properties or intangible things count more. This argument reflects the transformation of the American economy in a direction based on technology and data, not on factories and material assets.
At the same time, we know that Berkshire Hathaway Buffetta has recently increased its cash reserves to over USD 344 billion. This cash position is the second largest supply in the history of this company, being only $ 3.6 billion lower than the record from the first quarter of 2025.
Konglomerate sold shares worth USD 212 billion while he only purchased for $ 34.5 billion, which translated into a net sales exceeding USD 177 billion. Apple or Bank of America included among the companies sold.
Remember that Buffett is only a man and was wrong, for example, towards Bitcoin. He claimed that it was something without value, but as we know today, the cryptocurrency remains an investment hit.
