Buffett has warned in the past that crossing a ratio of 200% -- meaning stocks, measured by market cap, are worth twice as much as U.S. gross domestic production (GDP) -- is like playing with fire. Today, the Buffett indicator is at a blistering 225%! Alarm bells should be going off with deafening volume.

Key Takeaways Warren Buffett has pointed out that book value can significantly misstate the intrinsic value of a business.He prefers using intrinsic value, "the discounted value of the cash that can be taken out of a business during its remaining life.

Perhaps the best answer to the question about what investors should do in response to Buffett's subtle and not-so-subtle warnings to Wall Street is to simply do what Buffett is doing himself. That approach has worked pretty well for the last six decades.