I recently came across some interesting data: the Buffett Indicator in the U.S. stock market has hit a new high again. According to the latest data, this indicator (total market capitalization divided by GDP) is now soaring to 223%-224%, with some sources even saying it's close to 230%. To be honest, this is already at a historic high, far exceeding the 150% during the dot-com bubble in 2000.

I looked into the background, and the long-term average of the Buffett Indicator is roughly around 80%-100%, with 100%-120% considered a relatively normal valuation range. This current figure indeed indicates that U.S. stock valuations are somewhat excessive. The reason this indicator is important is because Warren Buffett himself places particular emphasis on it, even saying that it is the best single measure of market valuation.

Seeing the Buffett Indicator so high, I can't help but think that either a stock market bubble risk is building up, or the economy will have astonishing growth. However, based on historical experience, when the Buffett Indicator is this extreme, it usually isn't a good sign.