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Record Highs, Record-Low Yield: The Buffett Indicator Hits 232% as Income Disappears

Three valuation gauges are flashing at once while the S&P 500's dividend yield falls to roughly a quarter of what 10-year Treasurys pay.

August 12, 2026 Markets

The rally and the warning lights are the same story

The S&P 500 and Dow have hit new record highs and the Nasdaq has climbed over 9% since late July — while the Buffett indicator, the ratio of total US equity value to GDP, sits at a record high just above 232%, versus the 200% level at which Buffett said investors are "playing with fire." The Shiller CAPE is nearing levels only seen during the dot-com bubble. Bank of America's latest Global Fund Manager Survey has an AI bubble as the leading tail risk, cited by 45% of managers. The market is buying the AI trade and simultaneously naming it as the thing most likely to break.

Positioning points to more fuel, not less

Citadel Securities strategist Scott Rubner, who called the earlier reset, now says a growing list of buyers — notably big hedge funds and institutional managers — is pushing the market in a positive direction, and that leverage may build up again. That is a flows argument, not a valuation argument, and it cuts directly against the gauges above: stretched valuations plus rebuilding leverage is how drawdowns get amplified rather than avoided. Worth watching alongside it, though drawing a conclusion would be premature: insider selling at Materion, where both a director and the CFO sold ($1.08 million and $499,565 respectively), and at Aura Minerals, where the COO sold $3.75 million.

Equity income has stopped competing

The S&P 500's dividend yield is running just above 1%, the lowest on record, per Creative Planning's Charlie Bilello — not because payouts shrank but because prices climbed faster, with the index crossing 7,700 for the first time in early August and its cap weighting leaning ever harder on megacaps that pay little. The arithmetic is stark: $500,000 in a broad index fund throws off roughly $5,250 a year, versus about $23,250 in 10-year Treasurys at roughly 4.65%. And dividends are discretionary — Papa John's told the SEC on Aug. 6 that its board suspended the quarterly payout starting in Q3, redirecting cash to franchise incentives and technology after revenue fell 8.8% to $482.4 million and North America comparable sales dropped 8.3%; UWM Holdings scrapped its payout within two days.

Where the returns actually showed up

A Pokémon card index is up roughly 28% year to date, beating the S&P 500's 13% gain and Bitcoin's 29% decline, in a trading-card market now estimated at $10–15 billion, with TCGCharts valuing graded cards alone near $10.8 billion. Target reported trading-card sales up nearly 70% last year and Walmart a 200% jump online, both introducing purchase limits; Logan Paul's Pikachu Illustrator sold for $16.5 million. Crypto, meanwhile, sat still — Bitcoin near $64,000 with a Fear and Greed reading of 38 — even as an attacker minted about 4 billion ONE tokens through empty blocks, roughly 26% of Harmony's circulating supply, sending the token down as much as 40% to a record low. Citi separately sees silver surging to $90 as investment demand takes over.

Berkshire is the test case for deploying into this

Greg Abel has started spending: Alphabet is now a top-five holding, Berkshire acquired Taylor Morrison Homes for $6.8 billion, repurchased roughly $4.5 billion of stock — more than in either 2024 or 2025 — and was a net buyer of equities in the second quarter, breaking a 14-quarter selling streak. The stock is up 4.6% over the past month having underperformed year to date. Michael Burry is unconvinced, writing that these look like "framing moves" rather than investment moves and that he no longer finds Berkshire attractive, given the cash pile that reached almost $400 billion at the end of Q1 remains largely intact. The disagreement is really about whether a 232% Buffett indicator is a market to buy into at all.

Sources

Not investment advice.