While I totally agree the market is very overvalued, I don't think the Buffett Indicator is a very good metric anymore and that it has changed over time. Fewer people invested 50 years ago. US companies were not global companies 50 years ago, not to the degree they are today anyway. More investors from around the globe are putting money into US stocks now than 50 years ago.
All that being said, I think a 20% drop in the next year is very possible, though impossible to say for sure of course.
Perhaps, similar sentiments were echoed in the past at high valuations. Several posters have discussed the declining value of metrics like Shiller CAPE 10. I disagree, I believe valuation are always a way of determining what you get for a dollar invested. This of course gets watered down by the argument you make, “more participants driving prices higher.”
Ladies and Gentlemens, since 1871, this is only the second time the Schiller PE has reached the 40s; the last time was during the dot-com bubble.
1. Stocks: all-time high 2. Home Prices: all-time high 3. Bitcoin: all-time high 4. Gold: all-time high 5. Money Supply: all-time high 6. National Debt: all-time high 7. CPI Inflation: 4% per year since Jan 2020, 2x the Fed's "target" 8. Fed: cutting rates again this month pic.twitter.com/8ympHyvW18