The recent rise of the Warren Buffett Indicator to 205% has raised concerns about the high overvaluation of US stock markets, exceeding the country's GDP by double.
Record Market Overvaluation
The Warren Buffett Indicator, showing the ratio of market capitalization of stocks to the Gross Domestic Product (GDP), has hit an all-time high of 205%. This level surpasses observations made during the Dot-Com Bubble and the 2008 Financial Crisis.
Market Reaction Amidst Instability
Despite the indicator signaling a red alert, the market's reaction was relatively calm. The Dow Jones rose by 426 points, or 1%, while the Nasdaq Composite fell by 0.6%. Investors began to sell off tech stocks such as Microsoft and Nvidia, shifting their focus to healthcare firms.
Corporate Bitcoin Purchases Outpace ETFs
In terms of cryptocurrency, corporate purchases of Bitcoin continue to outpace ETFs for the third consecutive quarter. Strategy maintains the largest stash of Bitcoin among public companies, but others are also ramping up their holdings.
With rising market overvaluation and changing investor preferences, outlooks on future economic events remain cautious.
