Overvalued! A Global Outlook on U.S. Stocks

Two weeks ago in Ahead of the Curve, I wrote about Warren Buffett’s favorite tool for measuring the overall valuation of the market: the ratio of total market cap to GDP.

Today, we’re going to dig a little deeper into that analysis… and compare the U.S. market to some of its peers overseas.

First, there is no “correct” ratio of market cap to GDP, or any formula that suggests what ratio is optimal. This is very much a relative value analysis in which we can compare a given market to its peers, and to its own history.

So without more ado, let’s jump into the data. The chart below, courtesy of