The one metric Warren Buffett says can crash the stock market just hit a dizzying new high

In the December 10, 2001 issue of Fortune, Warren Buffett wrote a landmark 7-page article that introduced a crucial market metric that became renowned as the “Buffett Indicator.” The Great Man adapted the piece from a speech he’d given that July at the annual Allen & Co. bash in Sun Valley, privately delivered to the audience mainly comprising top CEOs. It was the legendary Fortune writer Carol Loomis who persuaded Buffett to adapt and extend his remarks for the article. Carol was my mentor during my early career at the magazine; I had the honor of working as her research assistant (no coasting allowed!) and she displayed the noblesse oblige to edit a couple of my pieces.

Even then, Carol had a great friend in Buffett. For many years, she famously edited the Berkshire Hathaway annual letter. I’m sure she’d admit that his guidance helped hone her forensic skills to the point where Carol could dissect the true financial performance of big enterprises from ITT to Hewlett-Packard to Fortune‘s owner Time Warner—she trashed the now-notorious AOL merger practically on announcement, irking our C-suite—better than practically any Wall Street sage or portfolio manager. At his last annual address as CEO in May of 2024, Buffett saluted Carol’s terrific work in helping the Oracle of Omaha rule as the most heeded voice in the business world, and correctly praised her “as the best business journalist.”

The concepts Buffett presented a quarter century ago are timeless, and they’re........

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