Over 400% of GDP: top analyst finds corporate equity double the level from the dotcom bubble — and triple 1987’s Black Monday

America’s stock market has swollen to a size that dwarfs every valuation extreme of the past four decades, according to JPMorgan Asset Management’s chief global strategist — a warning that dropped just days after a separate McKinsey study found the world’s wealth is increasingly decoupled from real economic growth.

On Aug. 10, David Kelly calculated that “the market value of all U.S. corporate equity is now over 400% of GDP.” That compares with 244% just before the pandemic, 204% at the peak of 2000’s dotcom bubble, and 74% before the 1987 stock market crash known as Black Monday.

If it sounds familiar, that’s because Kelly’s metric is almost like the famous Buffett Indicator — the ratio of the total value of publicly listed U.S. companies to GDP — but it’s a bit broader, covering all U.S. corporate equity, not just publicly traded stocks. The Buffett Indicator itself is above 200%, “strongly overvalued” or far beyond historic norms. When the Oracle of Omaha debuted this metric in Fortune in 2001, in co-authorship with Carol Loomis, they called it “probably the best single measure of where valuations stand at any given moment.” At the time, they noted that the ratio had reached an unprecedented level in the late 1990s: “That should have been a very strong warning........

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