Warren Buffett's favorite market gauge hit a 2-year high, signaling stocks are heavily overvalued and could crash

• Warren Buffett's go-to market gauge surged to a two-year high of 184%.
• The "Buffett Indicator" compares the stock market's total value to the overall size of the economy.
• Buffett has warned that buying stocks at a reading near 200% is "playing with fire."

Warren Buffett's favorite market gauge has surged to a two-year high of 184%, signaling stocks are overvalued and could suffer a devastating crash.

The "Buffett Indicator" takes the combined market capitalization of all actively traded US stocks and divides that figure by the latest quarterly estimate for gross domestic product (GDP). Investors use it to compare the overall value of the stock market to the size of the national economy.