The Buffett Indicator: International Evidence

41 Pages Posted: 1 May 2022

See all articles by Laurens Swinkels

Laurens Swinkels

Erasmus University Rotterdam (EUR); Robeco Asset Management

Thomas S. Umlauft

University of Vienna

Date Written: March 30, 2022


Warren Buffett suggested that the ratio of the market value of publicly traded stocks to economic output could identify equity market mispricings. We extend the existing research from the United States to international equity markets by investigating the return-predictive characteristics of the market value of equity-to-gross domestic product for a dataset comprising fourteen countries. The findings corroborate that the “Buffet indicator” explains a large fraction of ten-year return variation for the majority of countries outside the United States. Low ratios have predicted above-average investment returns, while periods of high ratios have, on average, been followed by below-average returns over the subsequent ten-year period. We also compare the “Buffett indicator” to other well-known stock market valuation signals and phenomena, such as the cyclically-adjusted price-to-earnings ratio and mean-reversion in stock returns.

Keywords: Equity market, investing, market timing, valuation

JEL Classification: F30, F60, G11, G12, G14, G15

Suggested Citation

Swinkels, Laurens and Umlauft, Thomas S., The Buffett Indicator: International Evidence (March 30, 2022). Available at SSRN: or

Laurens Swinkels (Contact Author)

Erasmus University Rotterdam (EUR) ( email )

Burgemeester Oudlaan 50
3000 DR Rotterdam, Zuid-Holland 3062PA

Robeco Asset Management ( email )

Rotterdam, 3000
+31 10 224 2470 (Phone)
+31 10 224 2110 (Fax)

Thomas S. Umlauft

University of Vienna ( email )

Vienna, Vienna 1090

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