What is the Buffett indicator and why does 222% matter?

The Buffett indicator divides total stock market value by GDP to gauge valuation. A reading near 222% suggests the market is richly priced, which can mean lower forward returns and fatter drawdowns. It is a risk light, not a timer. We pair it with earnings trends, rates, and margins to guide allocation choices.

Should I sell everything before a potential stock market crash?

We would not. Timing exits and re-entries is hard and often costly. Instead, set a target asset mix, keep a 6 to 12 month cash bucket in C$, and automate contributions. Use rebalancing rules to trim winners and add to laggards. This keeps you invested while managing downside risk.

How can Canadian retirees reduce sequence-of-returns risk?

Hold two to three years of planned withdrawals in cash or short-term GICs, then invest the rest in diversified stock and bond ETFs. Draw from the cash bucket during downturns and refill it after rallies. Coordinate TFSA and RRSP withdrawals to manage taxes and keep your spending plan stable.

What should I buy if the market drops 10% to 20%?

Prioritize quality: strong balance sheets, consistent free cash flow, and pricing power. Add broad ETFs for instant diversification and consider tilts to quality or low volatility. Use staged limit orders and rebalancing bands to guide buys. Aim to improve valuation, not chase perfect bottoms.

Global Market Insights

^GSPC Today, January 19: Buffett Indicator 222% Flags Crash Risk

ByDanny Kontos January 19, 2026January 19, 2026

A potential stock market crash is back in focus today, January 19, as the Buffett indicator sits near 222% while the S&P 500 (^GSPC) pushes to fresh highs. That extreme reading is a classic S&P 500 warning on valuations. We think Canadian investors should prepare, not panic. Smart market downturn preparation means staying invested, adding on dips, and protecting withdrawals. Below, we explain what 222% signals, why momentum still matters, and how to build a resilient plan for RRSPs and TFSAs.