4 Indicators Show US Stocks Remain Overvalued

#1 Buffett Indicator

Warren Buffett once asserted that dividing the total stock market cap by the GDP offers insight into whether the market is overvalued. Simply put, if the stock market value grows significantly faster than the actual economy, it may indicate a bubble. Despite the correction in the stock market in 2022, the current stock market cap still surpasses the US economy by 60%.

#2 PE Ratio

The PE ratio, when applied to the S&P 500 index, provides a broad market perspective on overvaluation. This ratio has been cyclically adjusted for economic and business cycle fluctuations. The current PE ratio stands at 28x, one standard deviation above the average.