Head-to-head comparison

S&P 500 P/E vs Buffett Indicator

S&P 500 P/E ratio vs Buffett indicator — which signals overvaluation better?

Verdict

Both wins

Different normalizations answer different questions. Both flash red at major peaks.

One-year comparison

Historical data unavailable — check back after the next cron run.

Left axis: buffett-indicator (green) · Right axis: sp500-pe (blue)

The analysis

P/E ratios are earnings-normalized; the Buffett indicator (market cap to GDP) is economy-normalized. Both peaked at historic highs in 2000 and 2021. P/E captures near-term earnings dynamics; Buffett indicator captures long-run wealth concentration. Use P/E for cycle valuation; Buffett indicator for secular valuation.