The US stock market continues to be crazy, here’s a Buffett indicator to judge the top

01) Storage chips are going crazy
Micron surged by 15 points,
SanDisk rose by 16 points,
Intel increased by 13 points,
all hitting new historical highs.
SanDisk was still over 200 at the beginning of the year, now over 1500, more than 7 times.
In comparison, Hynix and Samsung are considered the weaker gainers.
Those storage stocks in A-shares are simply ants.
Recently, a new stock claimed to be a small SanDisk, and in less than a month since its debut, it’s already 2.5 times higher, setting a benchmark for storage in A-shares.
All I can say is, such concentrated wealth effects are truly a feast for the bold. Droughts kill, floods drown—if you’ve been stuck in a deadlock recently, think more about your own issues.
Are you sitting tight because you dare not increase your position, or did you miss the switch?
If you got it right but with a small position, then cherish every dip back to MA5.
If you got it wrong, when should you switch? It’s simple—wait for the US stocks to settle down, and a pullback is a divergence signal.
02) Two options for those who got it wrong
Lazy people who got it wrong have two choices.
One is to hold sector ETFs, like the Sci-Tech Innovation, AI, or the recently popular aerospace ETF and satellite ETF.
The other is to blindly buy QDII funds, which indirectly allocate to US stocks. Most US stock funds have an average return of over 20%, and that’s still weak.
Accurately picking the right US stock storage and light-related QDII funds has gained over 40 points in the past two months.
You can search for QDII on Taobao yourself; just look at the return curves and you’ll see I’m not talking nonsense.
Unfortunately, due to various purchase restrictions, daily returns are only enough for a few cups of milk tea.
If you had a daily quota of 10,000, you wouldn’t even dare to imagine how high the returns could be.
Later in the second half of the year, when QDII quotas are relaxed, I will give everyone some advice.
03) Voices of overseas bubbles are louder
Now, don’t say A-shares feel like there’s a bull market anymore; the divergence in the US is even greater.
If you often look at opinions, you’ll find that the voices talking about bubbles overseas are louder.
Legendary hedge fund manager Paul Tudor Jones said that the current environment is very similar to 1999, but he believes the bull market might still have one or two years of endurance.
However, if valuations continue to inflate, the final correction will be suffocating.
Data shows that the Philadelphia Semiconductor Index rose 24 days out of the past 28 days, with a gain of up to 63%. Do you believe there’s no bubble with this kind of rise?
04) Buffett indicator: a simple tool to measure the ceiling
It’s helpful to see these bubble discussions because you can clearly see where the US stock market’s ceiling is.
A quick science note: the Buffett indicator.
In 2001, Buffett proposed that when the total market value of stocks divided by GDP exceeds 2 times, it’s highly dangerous.
Current data: 2025 US GDP is about 30 trillion dollars, and as of May, the total US stock market value is about 75 trillion. The current market value is still about 20 points away from 3 times GDP.
Data from past bubbles:
Before the dot-com bubble in 2000, the indicator reached 146%, then the Nasdaq plummeted 78%;
Before the 2008 financial crisis, it broke 110%, and the S&P 500 was halved within a year;
In early 2022, the indicator exceeded 200%, then the S&P 500 fell 19% in a year, the largest decline since 2008.
So this Buffett-proposed indicator warns of risks, and combined with Buffett’s massive accumulation of 397.3 billion in cash, can you understand why he’s not enjoying the bubble but hoarding cash instead?
As an investment evergreen, Buffett’s unity of knowledge and action is very important. He doesn’t know exactly when the bubble will burst, but he knows it will burst.
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Feeling your heart pounding after reading this? Yes, this is the mentality of US institutions living in fear of rising markets.
But the optimistic view is: standing before a new industrial revolution, anything is possible.
Would you rather be a pessimist who misses out, or an optimist riding the bubble?
My choice is: enjoy the rise within the bubble through regular investments, and be ready to buy the dip at any time.
Position management and profit-taking discipline are more important than trying to judge the top.