Warren Buffett:The upcoming stock market collapse?

Warren Buffett's favorite stock market indicator is flashing warning signs. Warren Buffett's called The Oracle of Omaha for good reason, and it is not just pure intuition. He coined a certain metric called the Buffett indicator, and he has even gone as far as to say that this is the single greatest measure of where evaluations in the stock market stand at any given moment.

Here's how the Buffett indicator is calculated: in the numerator of the fraction, we have the value of all stocks in the United States; on the bottom, we have America's GDP. Where do you think the Buffett indicator is at? Well, for reference, the long-term average of the Buffett indicator is around 88. Over the last 50 years, with the total value of the U.S. stock market at 43.7 trillion dollars and the most recent estimate for GDP at 26.1 trillion, the Buffett indicator is at a whopping 167 percent.

That's nearly double the long-term average, suggesting at first glance that the stock market is significantly overvalued. Only time will tell what this means for investors.