Warren Buffett, the billionaire investor leading Berkshire Hathaway, is warning Wall Street that opportunities are scarce due to high valuations. Over his nearly 60-year investment career, Buffett has delivered a compounded annual return of almost 20%, significantly higher than the S&P 500’s 10%. He attributes this success to investing in quality companies at favorable prices, rather than following market trends.
In recent years, Buffett has been a net seller of stocks for 12 consecutive quarters, accumulating $381 billion in cash. This trend suggests that he is cautious about buying stocks due to high valuations. The S&P 500 Shiller CAPE ratio, a measure of stock price relative to earnings over the past 10 years, has reached an all-time high of 40.
Historically, when Berkshire Hathaway’s cash levels peak and reach this level, the S&P 500 takes a dip. This pattern suggests that valuation may play a role in future market declines. However, these dips have been short-lived, and the S&P 500 has consistently recovered with gains in subsequent years.
For investors, Buffett’s actions imply that it’s essential to be cautious of overpriced stocks and focus on long-term prospects. History shows that investing for several years can lead to significant returns, as seen in Warren Buffett’s successful track record.
Source: https://www.fool.com/investing/2025/12/01/warren-buffett-warning-for-wall-street