Warren Buffett's Favorite Market Gauge Just Hit Its Highest Level Since the 1999 Dot-Com Peak. History Says Investors Should Watch Valuations Closely.
It's not necessarily a sell signal.
Overview
Warren Buffett has spent decades telling everyday investors that their best bet is to put their money in the S&P 500 (SNPINDEX: ^GSPC) and simply give it time to grow. Don't spend hours and hours researching stocks with the hope of outperforming the market. Just buy the American economy and let long-term compounding growth do the rest.
But one of Buffett's favorite valuation measures is flashing a warning right now.
Details
The Buffett indicator, which measures the total value of the U.S. stock market relative to the U.S. gross domestic product (GDP), recently hit 244%, its highest level ever, and well above the tech bubble peak of around 150%. In other words, investors are paying record-high prices for each unit of U.S. economic growth.
Source
Originally published at www.fool.com.