The Warren Buffett Indicator: Is the Stock Market Headed for a Crash? | | This Could Be the Biggest Bargain on the NYSE This overlooked Southern powerhouse is drowning in cash. It has paid consecutive dividends for over 35 years... and sheds bear markets like water off a duck's back. It offers a remarkable combination of value, yield (now 101.6%), and dividend growth. We expect double-digit returns for years to come. If this isn't a slam dunk, we don't know what one looks like.
Click here to discover the full details now. | | | Good news! After six short weeks, my new book, "THE GREATEST AMERICAN," is going into a second printing by Republic Books. Plus it's now available as an audiobook.
Amazon still shows the book "temporarily out of stock -- usually ships in one to three weeks," so I suggest you skip Amazon and order the book at Barnes & Noble. It's also available as an e-book.
Or you can still buy it directly from the author for $24 each ($19 extra copies) at https://skousenbooks.com/. I autograph each copy and include a rare Franklin stamp, all mailed at no extra charge inside the United States.
"This is the best single indicator of stock market valuation." -- Warren Buffett
Over the years, several indicators have been created to measure how undervalued or overvalued the stock market is.
Currently, the S&P 500 Index is selling for around 28 times earnings, way above its long-term average of 15-16.
Warren Buffett uses another indicator to measure valuation. His favorite is known as "The Buffett Indicator." He compares the total value of U.S. stocks (such as the S&P 500) with the growth of Gross Domestic Product (GDP), both in nominal terms. It's like comparing Wall Street (stocks) to Main Street (economic growth).
I've created the following chart to compare the two.
As you can see, Main Street and Wall Street tend to move together over the long run, although stocks are much more volatile and can go for fairly lengthy periods of time because falling back to the long-term economic growth rate (what we call bear markets).
As I state in "The Maxims of Wall Street" (available at www.skousenbooks.com), "Wall Street and Main Street are like a rocky marriage with frequent separations, but never a complete divorce." (p. 157). | | The Real Reason Trump Delayed His "Independence Day" Tariffs Did you know there is a secret government oversight group assigned to watch over the U.S. economy and markets? It was created 37 years ago by President Reagan. And it is the real reason President Trump delayed his Independence Day tariffs?
It sounds like a conspiracy theory, I know, but it's not. You can judge for yourself by watching this interview. | | | The Buffett Indicator Hits an All-Time High
However, today's gap between the stock market and the economy has never been greater, and has been growing apart for 10 years.
I believe the primary cause is the Federal Reserve's ZIRP -- zero interest rates policy -- and easy-money policies in general since the Financial Crisis of 2008 and the Covid Pandemic of 2020.
As Ludwig von Mises states, "Inflation is never neutral." It benefits the financial markets more than the economy.
At some point, something has to give -- either the economy grows faster or stocks need to go through a healthy bear market. If President Trump's trade war worsens, it is doubtful the economy will grow faster during his term in office. The huge federal deficits and growing national debt (what Buffett calls "fiscal folly") could also be a drag on the economy, offsetting the benefits of tax cuts and deregulation. Recently, the Fed has adopted a tight money policy, and has been reluctant to lower interest rates.
It's hard to predict what will trigger a bear market and the return to normalcy. But as Frank Holmes states, "Everything eventually reverts to the mean." (Maxims, p. 115).
What About China?
I should point out that there's not always a strong connection between the economy and the stock market. Below is the chart comparing GDP in China with the Shanghai stock market. As you can see there's a total disconnect, primarily because the Chinese stock market is largely rigged by speculators and manipulated by state-owned enterprises, which rely more on bank loans than equity financing.
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Buffett is worried about a bear market on Wall Street, as evidenced by the fact that his investment company, Berkshire Hathaway, is sitting on $350 billion in cash and Treasury bills, and thus has underperformed the market this year. Revenues actually declined slightly in the past year, and earnings dropped 63%. His major holdings include GEICO, Apple, American Express, Coca Cola and Moody's -- and a growing position in foreign markets such as Japan.
In the past 10 years, Berkshire has had a checked record, and Buffett himself has recommended an index fund over his own investment company.
Meanwhile, in my investment newsletter, Forecasts & Strategies, we remain fully invested in a well-diversified portfolio and are up by double-digit percentages this year, twice the performance of S&P 500, primarily by investing heavily in gold, bitcoin and technology.
My trading services are also handily beating the market, especially the TNT Trader, which I edit along with my son, Tim Skousen. The TNT Trader is a short-term trading service that focuses on technology stocks -- currently all six positions are up an average 40% over a three-month period (from 13% to 76%) and our call options have more than doubled (anywhere from 36% to 530%). We just took profits in five weeks on CoreWeave, an AI stock, making 200% on the stock, and up to 1,100% on the calls. We think there's more to go in tech.
For more information on my newsletter and the TNT Trader, go to www.markskousen.com, or call Grant at 1-800-211-7661.
Good Investing, AEIOU,
Mark Skousen
Doti-Spogli Endowed Chair of Free Enterprise, Chapman University
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FreedomFest | | The Case for a Free and Prosperous Society... and Announcing a Debate with a Marxist By Mark Skousen
Editor, Forecasts & Strategies
"A virtuous and industrious people may be cheaply governed." -- Benjamin Franklin
In early 2023, Michael Shermer, publisher of Skeptic magazine and our resident scientist at FreedomFest, asked me to write an essay entitled, "Economics of Life Made Simple." Since then the demand for this essay has been so strong that I printed up copies (16 pages with graphs) and have sold thousands at $3 each at http://skousenbooks.com. It has been especially popular among non-economists (lawyers, accountants, scientists and ministers). A lawyer told me, "It's the best brief I've ever read in economics."
It's time for an encore! A few months ago, Shermer commissioned me to write a second essay, "The Case for a Free and Prosperous Society." It has just been published in the July issue of Skeptic magazine, and offers a contrast with other philosophies of government. It is my first attempt to outline the legitimate purposes of government, and how to pay for it. It's available for free online here: The Case for a Free & Prosperous Society.
Feel free to email me with your comments at mskousen@chapman.edu.
Upcoming Debate at FreedomFest on 'Marxism in America'
I'm happy to announce that John Mackey, former CEO of Whole Foods Market and author of the bestseller, "Conscious Capitalism," will return to FreedomFest next year to debate Marxist Professor Andrew Hartman.
John will take the affirmative in the statement, "Resolved: Karl Marx's critique of capitalism is fundamentally flawed; free-enterprise capitalism is the greatest system ever invented to fulfill the needs of most members of society."
Hartman, a full-blown Marxist, will argue the opposite, that capitalism is a fatally flawed system and should be replaced by Karl Marx's vision of a socialist society. As he states in his book, "Colossal corporations felt free to act in ways that benefit their immediate profit margins while also severely damaging the health of the world's largest economy."
The sparks will fly!
'Early Bird' Discount Limited to First 400 to Sign Up
Mark your calendars now for July 8-11, 2026, at Caesar's Forum in Las Vegas. Take advantage now of our early bird discount ($400 each). This fee is limited to the first 400 attendees to sign up. After that, the price will go up to $450. Register here: https://freedomfest.swoogo.com/vegas2026. | | | About Mark Skousen, Ph.D.:
 Mark Skousen is an investment advisor, professional economist, university professor, author of more than 20 books, and founder of the annual FreedomFest conference. For the past 40+ years, Dr. Skousen has been investment director of the award-winning newsletter, Forecasts & Strategies. He also serves as investment director of four trading services: TNT Trader, Five Star Trader, Low Priced-Stock Trader, and Fast Money Alert. | | | | | |
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