Market Valuation Snapshot - August 1, 2025

# Market Valuation Snapshot - August 1, 2025

| **Buffett Indicator** (Total US Market Cap ÷ GDP) | **208.7 %** | **Significantly Over‑valued** |

| ------------------------------------------------- | ----------- | ----------------------------- |

| **Shiller CAPE (Cyclically‑Adjusted P/E)** | **38.2** | **41 % above 20‑yr avg.** |

> \*Buffett Indicator last refreshed **2025‑07‑31 15:18 CDT**; Shiller CAPE last refreshed **2025‑07‑31 21:01 CST** (sources: GuruFocus, Multpl).

## 1. What These Numbers Mean

### Buffett Indicator

* Compares the total market value of all U.S. equities to the size of the real economy.

* Historically **\~100 %** ≈ "fair value." Readings **>150 %** have preceded periods of below‑average 10‑yr equity returns.

### Shiller CAPE

* Uses *10‑year*, inflation‑adjusted earnings to smooth the business cycle.

* The 20‑year average is \~27. A print of **38** ranks in the **top decile** of post‑WWII history, hinting at **compressed forward returns**.

## 2. Implications for Investors

| Scenario | Forward 10‑yr Annual Return (historical medians) |

| ----------------------------- | ------------------------------------------------ |

| **Buffett Indicator ≥200 %** | \~0 % to 2 % (incl. dividends) |

| **CAPE ≥35** | 1 % to 3 % |

> Elevated valuations do **not** guarantee an imminent crash, but they *raise the bar* for growth and leave less margin of safety.

## 3. Key Drivers Behind Today's Readings

1. **Mega‑cap AI & Cloud rally** - market cap concentrated in the top 10 firms.

2. **Real rates still near zero** - discounted cash‑flows justify richer multiples.

3. **Fiscal impulse** - record federal deficits prop up nominal GDP.

## 4. Historical Context

```

2000 Dot‑com Peak → Buffett ~150 %, CAPE 44

2007 Housing Peak → Buffett 130 %, CAPE 27

2021 Post‑COVID → Buffett 240 %, CAPE 38

2025 Today → Buffett 208 %, CAPE 38

```

## 5. Tracking Tools

* \*\*iOS App - \*\****Buffett Indicator***: real‑time market temperature & push alerts.

* **Deep Value Investing Podcast & YouTube** - weekly dives into macro & valuations.

### Disclaimer

This report is for **educational purposes only** and reflects public data that may be revised. It does **not** constitute financial advice. Perform your own due diligence (or consult a registered adviser) before acting. We may hold positions in assets mentioned.

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