Market Bubble Indicator

A single-glance dashboard of 8 live market valuation and risk signals — the Buffett Indicator, Tobin's Q, the yield curve, VIX, S&P 500/M2, the high-yield credit spread, household equity allocation, and the real 10-year Treasury yield — so you can judge how stretched the market looks right now.

Buffett Indicator

219% GDP

OVERVALUED

219% of GDP

Total equity market value ÷ GDP. Buffett called >150-200% 'playing with fire'.

Tobin's Q

1.82

OVERVALUED

1.82 vs ~0.75 long-term avg

Market value ÷ replacement cost of corporate net worth. Long-run mean ~0.75; >1 suggests overvaluation.

Yield curve (10y-2y)

0.35pp

CAUTION

+0.35 spread

Recessions have historically struck 6-24 months after the curve un-inverts, so a recent un-inversion keeps this on watch.

VIX (volatility)

16.6

NORMAL

16.6

The 'fear index'. Very LOW = complacency, a classic late-bubble tell; spikes = fear.

S&P 500 ÷ M2

0.325

OVERVALUED

99th percentile of its ~10y range

Index relative to money supply, which strips monetary inflation out of 'record highs'.

High-yield credit spread

2.74pp

OVERVALUED

2.74% over Treasuries

Junk-bond risk premium. Very tight = investors pricing in near-zero risk (froth); widening = stress.

Household equity allocation

45.8%

OVERVALUED

45.8% of financial assets

Share of household savings held in stocks. Near-record allocations have historically preceded weak forward returns — the opposite of 'cash on the sidelines'.

Real 10Y Treasury yield

2.26%

NORMAL

2.26% inflation-adjusted

Inflation-adjusted return on 'safe' Treasuries. Very high or negative levels both distort how investors price stocks.

VIX is live via Finnhub, and the remaining signals fetch live from the Federal Reserve's FRED API when configured; unconfigured metrics fall back to a recent reference value. Not investment advice.

How It Works

1Each card shows a well-known valuation or risk metric alongside its long-term average and a red/amber/green read on where it stands today.
2VIX updates live from Finnhub; the other seven signals update live from the Federal Reserve's FRED API.
3No single metric should drive a decision on its own — use the mix to gauge whether valuations look stretched across multiple angles at once, or just one.
4Pair this with your own research and time horizon; a red reading doesn't mean 'sell today', it means valuations are historically elevated.

Frequently Asked Questions

What is a stock market 'bubble indicator'?

It's a dashboard of valuation and risk metrics — like the Buffett Indicator, Tobin's Q, and credit spreads — that are each individually used by investors to gauge whether the overall stock market is overvalued relative to its own history. No single metric is definitive, but when several point the same direction at once it's a useful signal of how stretched valuations are.

What is the Buffett Indicator?

The Buffett Indicator is the total market value of US stocks divided by US GDP, computed here from the Federal Reserve's Z.1 Financial Accounts (summing corporate equities across the nonfinancial and financial sectors) divided by nominal GDP. Warren Buffett once called it 'probably the best single measure of where valuations stand at any given moment,' though he has since noted it shouldn't be used in isolation. Readings above 150-200% have historically been associated with overvalued markets.

What is Tobin's Q?

Tobin's Q divides the market value of a company (or, in aggregate, the whole corporate sector) by the replacement cost of its net assets. A ratio above 1 suggests the market is valuing assets above what it would cost to rebuild them from scratch, which has historically coincided with overvalued markets. This tool approximates it from the Federal Reserve's Z.1 Financial Accounts data.

Why does the yield curve matter for market risk?

The yield curve (commonly the 10-year minus 2-year Treasury spread) inverts — goes negative — when short-term rates exceed long-term rates, which has preceded most US recessions since the 1960s. Recessions have historically arrived roughly 6-24 months after the curve un-inverts (goes back positive), which is why the period right after un-inversion still warrants caution.

Is a high VIX good or bad?

Neither reading is inherently 'good.' A very low VIX signals complacency — investors aren't pricing in much risk, which has historically shown up near market tops. A spiking VIX signals active fear, typically during a selloff. The 'normal' middle ground reflects healthy, two-sided uncertainty.

What is household equity allocation?

It's the share of household financial assets held in stocks (directly or through funds), from the Fed's Z.1 Financial Accounts. It's the flip side of 'cash on the sidelines': when households already hold a near-record share of their savings in equities, there's less fresh money left to keep bidding prices up, and past peaks in this measure have coincided with weak subsequent returns.

Why does the real 10-year Treasury yield matter for stocks?

The real (inflation-adjusted) yield on 10-year Treasuries is a rough proxy for the 'risk-free' return investors can get without touching stocks. When it rises, safer assets become more competitive and the future cash flows behind richly-valued, long-duration stocks get discounted more harshly. When it's very low or negative, cash loses to inflation, pushing money into riskier assets almost by default.

Should I sell everything if most of these metrics show red?

No. These are valuation signals, not market-timing tools — expensive markets can stay expensive (or get more expensive) for years, and cheap markets can get cheaper. They're best used to calibrate expectations (e.g., temper return assumptions, size positions conservatively, hold some dry powder) rather than to trigger all-or-nothing decisions.

Where does the live data come from?

VIX comes from Finnhub. Everything else — the Buffett Indicator, Tobin's Q, the 10y-2y yield curve, the S&P 500/M2 ratio, the high-yield credit spread, household equity allocation, and the real 10-year Treasury yield — comes from the Federal Reserve's free FRED API (GDP, Z.1 Financial Accounts, Treasury yields, M2 money supply, and ICE BofA credit index data).