Market Performance - The S&P 500 has increased by 17% in 2025, marking the third consecutive year of double-digit gains, resulting in an 83% gain over the past three years [1] Investment Strategy - Warren Buffett advocates for investing in S&P 500 index funds, yet Berkshire Hathaway sold its S&P 500 ETFs last year and has been a net seller of stocks for 12 consecutive quarters, a record streak [2] - Berkshire Hathaway's cash reserves have reached nearly $392 billion, reflecting a 200% increase over the past three years, the highest level ever [2] Market Valuation - The current market is perceived as expensive, with concerns about a potential stock market bubble following three years of high growth [4] - The S&P 500 cyclically adjusted P/E (CAPE) ratio is over 39, the highest in 25 years, indicating challenges in finding undervalued stocks [5] Investment Philosophy - Buffett emphasizes the importance of focusing on high-quality companies rather than cheap stocks, suggesting that current prices are not fair or cheap [6] - Maintaining cash reserves is crucial for capitalizing on investment opportunities when they arise, while staying invested allows for compounding returns over time [7]
As 2026 Gets Closer, Warren Buffett's Warning Is Ringing Loud and Clear. Here Are 3 Things Investors Should Do.