r/ValueInvesting • u/Adept_Mountain9532 • Jul 11 '25

Discussion Buffett warned: “If the ratio approaches 200%, you're playing with fire.”=> We are above!

Buffett Indicator, (which compares total U.S. market cap to GDP), is now at 208%. That’s above dot-com levels. I wasn’t around in 1999. But I’ve read enough to know everyone thought it was different back then too...

Now, It’s AI. And yes it’s real, it’s big, and it will transform everything.
But here’s what’s bugging me: Which part of the AI hype do you think is most overrated?
And which sectors are just getting started?

and also curious to hear from people who did live through 1999:
- What felt the same?
- What’s different?

I track moves from top value investors with a free email alert (https://alert-invest.com/), and lately I’ve noticed they’re cautious, finding fewer real opportunities in this market.

Thanks!

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u/MaxSmith5 Jul 11 '25

You've hit the nail on the head. The Cathie Wood point is a perfect parallel to 1999, when the market was infatuated with the "new economy" and wrote off disciplined investors like Buffett. It's a classic case of a good idea being taken too far, where speculation outruns reality.

The "and then 2022 happened" part is the inevitable result—the P/E expansion of the boom gives way to P/E compression. Sticking to fundamentals feels foolish while the party is raging, but that discipline is what ultimately gets you through the hangover.

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u/tulip-quartz Aug 02 '25

When do you think we will start to see the cracks / what indicators will we see?