Global stock markets are approaching a new record: a market capitalization of $100 trillion, according to Bloomberg data.

Soon, the market capitalization of global stocks will be equivalent to 111 per cent of global GDP. The global GDP level is $87.75 trillion in 2019, and given that global GDP growth is expected to slow to-3 per cent this year from more than 3 per cent last year, the ratio is actually higher.

Measured by Buffett's indicators, it has entered the bubble zone.

As early as December 31, 2019, the market capitalization of global stock markets was almost the same as that of global GDP. As global stock markets have rebounded and continued to climb, the total market capitalization of global stock markets has exceeded GDP again in recent days.

In the past decade, there have been two cases in which the market capitalization of the global stock market was higher than that of the GDP and then the market crashed:

On October 31, 2007, the market capitalization of global stock markets peaked at US $62.56 trillion (global GDP was US $58.03 trillion in the same year), and then fell to the bottom of US $27.01 trillion on February 28, 2009. it shrank by 2/3.

On January 31, 2018, the market capitalization of global stock markets peaked again at $86.04 trillion, surpassing the global GDP of $81.22 trillion in 2017, and then fell all the way to $69.65 trillion on December 31, 2018, a decline of nearly 1/4.

For now, the main concern is still focused on US stocks. After the United States reported the biggest decline in GDP growth since World War II in the second quarter, the market capitalization / GDP of US stocks soared to 170% and is now close to 175%.

Some experts say that the Buffett index is not only a valuation index, but also a way to measure the leverage of the economy to the market. Given that US stocks are at an all-time high relative to the size of the economy, a fall in US stocks could have a greater impact on the US economy.