Does Warren Buffett Know Something Wall Street Doesn't? He Just Delivered a Fresh Warning and Here's What It Means for Investors.
Warren Buffett delivered a fresh warning at the Berkshire Hathaway annual meeting, stating that people are in a "more gambling mood than now" and that prices for many things will look "very silly". The S&P 500 Shiller CAPE ratio supports Buffett's comment, showing that stocks are historically expensive.
Warren Buffett, Berkshire Hathaway's chairman, warned investors at the company's annual meeting that people are in a "more gambling mood than now" and that prices for many things will look "very silly". Buffett hasn't been a major buyer of stocks for over a dozen quarters and has helped Berkshire Hathaway build up a record pile of cash. The S&P 500 Shiller CAPE ratio, an inflation-adjusted look at stock price in relation to earnings per share, is near a record level, indicating that stocks are historically expensive. Buffett's warning comes as the S&P 500 resumes its positive direction after headwinds emerged in the market earlier this year. Berkshire Hathaway's return has historically topped 19%, beating the S&P 500's compounded annual gain of about 10%. Buffett's comments suggest that buying stocks at excessively high valuations generally isn't the best move.
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