Warren Buffett Says Investors Could Be "Playing With Fire." Here's the Best Way to Protect Your Portfolio.

Market Performance - The stock market has been thriving throughout most of 2025, with the S&P 500 up by more than 14% and surging by 35% since its April lows [1][2] Valuation Concerns - Some investors are worried about potential overvaluation, suggesting that the market may be in a bubble that could burst [2] - The Buffett Indicator, which compares the total U.S. stock market value to GDP, is currently at around 220%, indicating risky territory [4][5] Historical Context - The last peak of the Buffett Indicator was in November 2021 at close to 193%, followed by a bear market that lasted nearly a year [5] - The ratio has not dipped below 80% since 2012, which Buffett indicated as a safer zone for investors [6] Future Outlook - While the Buffett Indicator suggests the market may be in the late stages of a bull market, it remains unclear if a recession is imminent [8] - Regardless of the timing of a potential downturn, it is advisable for investors to prepare for market volatility [9]