Core Viewpoint - The S&P 500's high valuation suggests a potential decline in the stock market by 2026, as indicated by historical performance trends following similar valuation levels [3][8][10]. Company Insights - Warren Buffett has been a net seller of stocks since Q4 2022, with net sales totaling $184 billion as of September 2025, despite Berkshire Hathaway having a record $382 billion in cash and short-term investments [6][7]. - Berkshire Hathaway's Class A shares have increased over 6,100,000% since Buffett took control, significantly outperforming the S&P 500's return of about 46,000% [2]. Market Valuation - The S&P 500's average cyclically adjusted price-to-earnings (CAPE) ratio reached 39.4 in December, marking the highest valuation since October 2000, and has only exceeded this level during 25 months in its 68-year history [8][9]. - Historical data indicates that following periods when the S&P 500's CAPE ratio was above 39, the index has declined by an average of 4% in the subsequent year and has never increased during the three years following such high valuations, with an average decline of 30% [10][11].
Warren Buffett Retires With a $184 Billion Warning to Investors. History Says the Stock Market Will Do This in 2026.