--- title: "Buffett and Barclays market indicators send a warning to stock market bulls" type: "News" locale: "zh-HK" url: "https://longbridge.com/zh-HK/news/264643597.md" description: "The U.S. stock market has risen 36% since the low in April, but it faces warnings from the \"Buffett Indicator,\" favored by Warren Buffett. This indicator shows that the ratio of total market capitalization to GDP has surpassed the pandemic peak, indicating that stock valuations are too high. A report from Barclays points out that current market concerns about \"bubble behavior\" are intensifying. Barclays has also launched a market optimism indicator, warning investors to be cautious of signals of \"over-leveraging\" and \"irrational exuberance.\"" datetime: "2025-11-06T12:05:47.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/264643597.md) - [en](https://longbridge.com/en/news/264643597.md) - [zh-HK](https://longbridge.com/zh-HK/news/264643597.md) --- > 支持的語言: [简体中文](https://longbridge.com/zh-CN/news/264643597.md) | [English](https://longbridge.com/en/news/264643597.md) # Buffett and Barclays market indicators send a warning to stock market bulls Since the low point in April, the U.S. stock market has ignored all warning signals and soared 36%, a remarkable increase. Now, it is facing a warning from an indicator favored by investment legend Warren Buffett. The "Buffett Indicator," while not perfect, remains a practical tool for assessing whether stock valuations are too high. This indicator has surpassed the peak during the pandemic—similar breakouts also occurred before the bear market in 2022. The calculation method for this indicator compares the total market capitalization of the U.S. stock market (currently about $72 trillion) with the Gross Domestic Product (GDP). Data shows that even though U.S. GDP growth has reached a nearly two-year high, the current market size is still more than twice the size of the economy. Stefano Pascal, a derivatives strategist at Barclays, stated in a report to clients: "The current ratio naturally indicates that stock valuations are too high and confirms market concerns about 'bubble behavior.'" Although this indicator is not without limitations, "for investors, viewing the record stock market capitalization to GDP ratio as another warning signal of 'excessive optimism' is still a prudent move." Earlier this year, the Barclays team launched its own market optimism indicator. This indicator is derived from options data since 1997 and was created against the backdrop of the artificial intelligence revolution generating billions of dollars in value for a few large tech companies, with comparisons between the current market situation and the late 1990s internet bubble emerging frequently. Barclays introduced this indicator to help investors be alert to signals of "overextended positions" and "irrational exuberance." Research has found that the trend of Barclays' proprietary indicator often aligns with the Buffett Indicator, and both are currently issuing similar warnings. This indicator measures "the proportion of U.S. stocks with active options trading that are in an 'optimistic state'," and this proportion is currently about 11%, above the long-term average of 7.1%. During the late 1990s internet bubble and the 2021 "meme stock" craze, this indicator had previously surpassed the 10% peak. Concerns about "bubble risk" have persisted for months—the price-to-earnings ratio of the S&P 500 has risen to levels "typically seen before past crashes." Bears have also warned that a cooling labor market and pressure on low-end consumers indicate instability in the U.S. economic foundation. Nevertheless, companies continue to deliver robust earnings, and spending in the artificial intelligence sector has injected momentum into economic activity. Buffett warned in 2001 that when the valuation to GDP ratio reaches current levels, investors are essentially "playing with fire." The chairman of Berkshire Hathaway also cautioned against viewing this indicator in isolation. At the 2017 annual meeting, he stated: "Determining whether the market valuation is high or low cannot be simply concluded by applying one or two formulas." Buffett emphasized that while "every piece of data has some significance," its importance can vary greatly depending on the specific context The historical performance of the Buffett Indicator also confirms the necessity of this "cautious outlook." In May of this year, the indicator showed that stock valuations were relatively cheap, and thereafter the stock market began a historic six-month rally; earlier, in the spring of 2019, the indicator had issued warning signals, yet the S&P 500 index still reached new highs. Pascal pointed out that over the past 20 years, the structure of the stock market has undergone significant changes—large technology companies with abundant cash flow now account for nearly one-third of the total market capitalization of the S&P 500 index. The indicator also has other limitations, such as the expanding global earnings exposure of U.S. companies, while GDP only measures domestic economic activity. Additionally, he added, "When the economy is doing well, stock investors tend to be optimistic, and this sentiment is also reflected in GDP growth." However, there are also reasons to be cautious about the warnings from these two indicators, with the core factor being corporate earnings. Currently, corporate earnings are growing significantly, providing support for rising stock prices, and the earnings performance in the third quarter has reached one of the best levels in years. Bloomberg Intelligence data shows that among the S&P 500 constituent companies that have released earnings reports (accounting for over 70%), profits increased nearly 13% year-on-year, and sales growth also reached a three-year high. Deutsche Bank strategists wrote in a report on November 4 that the "year-on-year median earnings" of S&P 500 constituent companies is at the top of the historical normal range, and if the post-pandemic recovery boom phase is excluded, this figure is close to the highest level in the past 15 years. Furthermore, the earnings growth in the U.S. stock market "has spread across multiple sectors," alleviating concerns about "earnings being concentrated in a few large technology companies." Deutsche Bank strategist Jim Reid noted in another report that the recent market narrative has shifted, "the issue of market concentration has raised new questions," intensifying investors' anxiety about a stock market correction. He mentioned that Palantir Technologies' stock price plummeted nearly 8% on Tuesday (despite the company raising its revenue forecast the previous day), "which is a typical manifestation of this narrative shift." However, Reid also stated that since the data analytics company's stock price has tripled over the past year, "any earnings report performance faces extremely high expectations." Barclays strategists stated that although the market is entering a seasonally strong period, caution is still necessary. They advise investors: "'Leveraging upward gains' remains a prudent strategy—both to lock in recent profits and to control risks." ### 相關股票 - [Barclays (BCS.US)](https://longbridge.com/zh-HK/quote/BCS.US.md) - [Berkshire Hathaway (BRK.A.US)](https://longbridge.com/zh-HK/quote/BRK.A.US.md) ## 相關資訊與研究 - [Rosen Law Firm Encourages ADMA Biologics, Inc. 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