The Buffett Indicator hit 217% in September 2025. 

That's higher than the dot-com bubble (140-150%) and the COVID peak (190%). 

It's the highest level we've seen since tracking began in the 1970s.

This matters if you own index ETFs.

Most popular U.S. market ETFs, SPY, VOO, IVV, QQQ, SCHD, track either the S&P 500 or Nasdaq. They move with the overall market capitalization relative to GDP. 

When the indicator sits at or above 200%, the entire underlying market faces elevated overvaluation risk. That means your broad index ETFs do too.

S&P 500 ETFs (SPY, VOO, IVV) are highly sensitive to overvaluation. Big Tech holds the largest weight in these funds—companies like Apple, Microsoft, Nvidia, Amazon, and Meta. 

Big Tech companies push overall capitalization higher faster than other sectors. When valuations compress, these ETFs feel it first and hardest.

Nasdaq 100 ETFs (QQQ) concentrate even more heavily in technology stocks. About 50% of the index consists of the top 10 holdings, nearly all tech companies.

The overvaluation risk and potential drawdown exceed that of the S&P 500. During corrections, tech-heavy indices typically fall faster and further than broader market benchmarks.

Value ETFs (VTV, IVE) show less vulnerability to excessive valuation. These funds focus on companies trading at lower price multiples relative to fundamentals—typically in sectors like financials, healthcare, and consumer staples. 

But they still follow broader market trends. In major corrections, few asset classes escape entirely.

We're now at 217%—well past that threshold.

P/S ratio for the S&P 500 reached a record 3.35, compared to 2.27 during the dot-com bubble. The CAPE Shiller P/E sits above 37.8, a level seen less than 5% of the time historically.

Historical trend line:

Both metrics are at all-time highs.

Berkshire Hathaway holds $344 billion in cash, the second-highest level in company history. 

The firm has been a net seller of stocks for 11 consecutive quarters. Buffett hasn't bought back any Berkshire shares for four straight quarters, despite sitting on massive cash reserves.

Actions speak louder than words. And Buffett's actions suggest caution.

Some analysts argue the U.S. economy has fundamentally changed. Fewer physical assets, more technology, AI, and intellectual property mean GDP no longer fully captures real economic value.

Others point out that "this time is different" has been said before every major crash.

Bank of America noted: "It better be different this time"—when the S&P 500's P/B ratio exceeded dot-com bubble levels (5.3 vs. 5.0 in 2000).

The Buffett Indicator isn't just an interesting data point. 

It is a risk indicator for ETF investors.

If your portfolio consists primarily of U.S. index ETFs, these signals deserve attention. History shows that after similar overheating periods, returns can remain muted for years.

That gap between current valuations and historical norms matters more than you might think. Past peaks of this magnitude have consistently been followed by significant corrections and extended periods of below-average returns.

The question isn't whether valuations are high—the data confirms they are. The question is whether structural changes in the economy justify these levels, or whether we're seeing another cycle of excess that will eventually correct.