Are U.S. stocks overvalued? Understanding the current risks in one article

1. The current valuation of U.S. stocks is truly in the historical bubble range
1. The S&P 500 Price-to-Earnings ratio has exceeded 30, approaching the high-risk level of the 2000 Internet bubble.
2. Buffett’s core indicator: total market capitalization ÷ GDP, reaching 227%—232%, far above the dangerous red line of 200%. The last time it reached this level was just before the Internet crash.
3. The Shiller CAPE cyclically adjusted P/E ratio is as high as 37—39.5 times, while the long-term average is only 17.3 times, doubling the premium.
4. Corporate profits as a percentage of GDP have surged to 12%, normally only 7%—8%. Such high profitability levels are impossible to sustain long-term and will inevitably revert downward later.
2. Buffett has already expressed his stance with real money, signaling an extremely strong message
Berkshire Hathaway holds $397.38 billion in cash, hitting a record high. Cash as a proportion of total assets is directly at 31.7%, far above the usual 15% normal center.
Buffett has been very straightforward: he won’t consider a position unless the market drops at least 50%, and he won’t start large-scale deployment.
3. The iron law of the stock market: rises must be followed by falls, cycles never absent
The historical pattern of the U.S. stock market is clear: on average, a 10%+ moderate correction occurs every 1.8 years, and every 7 to 8 years, a major bear market with over 20% decline inevitably occurs.
Currently, with high valuations combined with high interest rate environments, double pressure is mounting, and the probability of a deep correction has been maximized.
#美股 # Buffett #理性投资 # cycle trading