One final check in with the investing GOAT's favorite stock market indicator before he rides off into the sunset. Berkshire Hathaway (BRK-B) CEO Warren Buffett, 95, will hand over the reigns to his hand-picked successor Greg Abel on Wednesday. The official passing of the torch caps a storied career for Buffett, which included buying a major US railroad (Burlington Northern), striking up a friendship with Microsoft (MSFT) co-founder Bill Gates, and offering up scores of pithy comments in annual shareholde ...

Market Valuation Indicators - The Shiller P/E (CAPE) ratio is currently around 40, significantly above its long-term average of 17, indicating potential overvaluation as historical data shows a 20% or more decline when the ratio exceeds 30 for extended periods [3] - The Buffett Indicator, which measures total U.S. stock market capitalization against GDP, is near 225%, suggesting significant overvaluation, as any ratio above 160% is considered overvalued [4] Midterm Elections Impact - The upcoming midterm elections in 2026, with a third of Senate seats and all House positions contested, historically lead to increased market volatility, with an average annual return of only 0.3% for the S&P 500 in the year leading up to elections since 1950 [5] - Post-midterm elections, the S&P 500 has historically rallied, with no negative returns following elections since 1939 and an average 12-month return of 16.3% after elections since 1950 [6] Bull Market Longevity - The current bull market has recently celebrated its three-year anniversary, which is typically a positive sign, as bull markets have averaged five and a half years since 1950, with historical data indicating that bull markets lasting three years often extend to at least five years [7] - Despite indicators suggesting overvaluation, historical trends show strong performance for stocks after midterm elections and the potential for prolonged bull markets [8]

Market Sentiment - Legendary investor Jim Rogers has sold all his U.S. stocks, indicating a bearish outlook, while Warren Buffett's Berkshire Hathaway has been selling large quantities of stock each quarter since 2024, raising concerns among investors [1][2][6] - A Bank of America survey reveals that 91% of fund managers believe U.S. stocks are overvalued, the highest level since 2001, suggesting a potential downshift in returns over the next decade [2][4] Stock Ownership Trends - Record levels of stock ownership in the U.S. coincide with increased risk of a market downturn, with 45% of Americans' household financial assets now in stocks, an all-time high [3][4] - Stock ownership has surpassed levels seen in the late 1990s, prior to the dot-com bust, raising alarm among economists [4][5] Market Performance Indicators - The "Buffett Indicator," which compares stock market performance to GDP, indicates that the market was at 230% of GDP in September 2025, suggesting potential overvaluation [6] - The S&P 500 has returned over 230% in the past decade, while the Nasdaq Composite has surged about 430% as of December 2025, reflecting a strong but potentially unsustainable market trend [3] Alternative Investment Strategies - Gold has gained 60% year over year and reached a record high of over $4,500 per ounce, with experts recommending it as a hedge against market downturns [10][9] - Real estate is highlighted as a productive asset class that can generate passive income even during market downturns, with platforms allowing investments in rental properties with minimal capital [12][14]

Core Insights - The significant difference between the amounts bought and sold in Berkshire Hathaway's portfolio is attributed to rising market valuations, especially among large-cap stocks [1] - Warren Buffett has been a net seller of stocks for 12 consecutive quarters, resulting in nearly $184 billion in net sales over the past three years [3] - Buffett's actions and comments indicate a cautious approach to the stock market as he prepares for retirement, emphasizing the importance of valuation awareness [5][6] Portfolio Management - Additions to the portfolio have been modest, primarily involving a few hundred million dollars to existing positions, with notable new investments in Chubb, Alphabet, and Sirius XM [2] - Berkshire Hathaway's stock portfolio is currently valued at approximately $315 billion, but it could exceed $500 billion if not for the significant stock sales over the last three years [4] Market Valuation Trends - Apple trades at 33 times forward earnings, a significant increase from when Buffett initially purchased it at around 10 times forward earnings [7] - The S&P 500 index is trading at roughly 22 times forward earnings, a level rarely seen since the early 2000s, with the CAPE ratio reaching 40 for only the second time in history [8] Investment Strategies - Investors are advised to take gains when appropriate, as holding onto high-valuation stocks can be risky, exemplified by Berkshire's heavy reliance on Apple [11][12] - Maintaining a cash position is recommended as valuations rise, allowing for downside protection and opportunities during market corrections [14][15] - Holding high-conviction stocks is crucial, as demonstrated by Buffett's long-term investments in American Express and Coca-Cola, which he has held for over 30 years [16][17]

Group 1: Investment News Highlights - Bill Ackman has made a $2.1 billion deal to acquire an insurer, aiming to create a "modern Berkshire Hathaway" [1] - Ray Dalio discusses the evolving nature of market crises and their impact on investment strategies [1] - A rotation from growth stocks to value stocks is anticipated to strengthen in the upcoming year [1] Group 2: Value Investing Insights - 2026 is projected to be a significant year for value stocks, indicating a potential shift in market dynamics [4] - Polen Capital emphasizes a multi-dimensional approach to small-cap investing, highlighting the importance of diversification [4] - The Fear & Greed Index indicates a strongly overvalued market, suggesting caution among investors [4] Group 3: Research and Analysis - Research indicates that regulation may not effectively mitigate bad behavior in financial markets [7] - Professionals recommend various books that can enhance investment knowledge and strategies [7] - Predictions for 2026 suggest that the equal-weight S&P 500 may outperform the traditional market cap-weighted version [7]

Chip Somodevilla / Getty Images Quick Read Warren Buffett has been a net seller of stocks for 12 straight quarters. Berkshire Hathaway (BRK-A, BRK-B) now holds a record $382B in cash. Berkshire reduced its Apple stake from 50% of the portfolio to 20% over the past year. The Buffett Indicator sits at 223%, signaling extreme overvaluation at 77% above trend line. If you’re thinking about retiring or know someone who is, there are three quick questions causing many Americans to realize they can retir ...

Core Viewpoint - The stock market is perceived as generally overvalued, yet there are still investment opportunities available for those willing to explore beyond traditional avenues [2][3][20]. Investment Activity - Berkshire Hathaway has been a net seller of stocks for 12 consecutive quarters, selling over $24 billion worth of equities in the first nine months of 2025, resulting in a cash position of $354 billion [2][3]. - Buffett's recent investments total approximately $14 billion, indicating a strategic approach to investing in the current market [4][6]. Notable Purchases - Significant investments include $4 billion in Alphabet, the entirety of OxyChem from Occidental Petroleum, and increased stakes in Japanese trading houses Mitsubishi and Mitsui [7][10][18]. - The purchase of OxyChem was particularly strategic, as it allowed Berkshire to acquire a subsidiary at a compelling value, while maintaining a position in Occidental's preferred shares that yield an 8% dividend [14][15]. Market Valuation Insights - The "Buffett Indicator" suggests that U.S. stocks are expensive, with the current level around 225%, indicating potential risks for investors [8]. - The S&P 500's price-earnings ratios are at levels comparable to the peak of the dot-com bubble, reinforcing the notion of overvaluation in the market [8]. Investment Strategy - Buffett's recent purchases reflect a shift towards identifying value in sectors and companies that may not be on the radar of typical investors, such as the chemicals industry and international stocks [9][21]. - The focus on Japanese trading houses highlights a broader strategy of seeking value outside the U.S. market, as these stocks appear more attractive from a valuation perspective [18][21]. Conclusion - Despite the overall market being expensive, there are still opportunities for significant returns if investors are willing to expand their search beyond conventional investments [20][22].

Core Insights - Warren Buffett has been a net seller of stocks for 12 consecutive quarters, indicating a cautious approach to the current market environment [1][6][7] - Berkshire Hathaway has sold $183.53 billion more in stocks than it has purchased over the last three years, reflecting a strategic shift in investment philosophy [7][8] - The Buffett Indicator, a measure of market valuation, has reached an all-time high of 223%, suggesting that the stock market is historically overpriced [10][11] Investment Philosophy - Buffett's famous quote, "be fearful when others are greedy, and greedy when others are fearful," encapsulates his investment strategy, emphasizing caution in a high-valuation environment [5][6] - Despite selling stocks, Buffett maintains a long-term optimistic view on the U.S. economy and stock market, indicating that his selling may be more about strategic profit-taking rather than outright pessimism [5][9] Market Conditions - The current stock market is characterized by high valuations, making it increasingly difficult to find value, which has led to Buffett's persistent selling activity [8][13] - Specific stocks, such as Apple, have seen significant increases in their price-to-earnings ratios, further complicating the search for attractive investment opportunities [12][13] Historical Context - Buffett's track record shows a cumulative gain of over 6,107,000% in Berkshire Hathaway's Class A shares, highlighting the effectiveness of his patient investment approach [17][18] - Historical examples, such as Buffett's investment in Bank of America during the financial crisis, illustrate the potential for significant returns when capitalizing on price dislocations [18][20] Future Outlook - Berkshire Hathaway holds nearly $382 billion in cash and equivalents, positioning the company to take advantage of future investment opportunities when valuations become more favorable [21]

U.S. stock markets have slowed and and lag global markets, sometimes by wide margins. - MarketWatch photo illustration/iStockphoto A few friends of mine have been surprised, even amused, when I told them that I’ve sharply dialed back my exposure to U.S. stocks this year in favor of overseas markets. Have I erred? After all, the S&P 500 is up almost 17% so far in 2025. But guess what? You’d have made a lot more this year investing in much hotter non-U.S. markets. Check out these returns for 2025, based on ...

Core Insights - The U.S. stock market has surged over 30% since April, but concerns about high valuations, particularly in artificial intelligence, are causing investor caution [1][2] - The "Buffett Indicator" suggests that the market capitalization of U.S. stocks, currently around $72 trillion, is more than double the GDP, indicating potential overheating [2][3] - In a volatile market, dividend-focused investments are becoming increasingly attractive as they provide a steady income stream [4] Market Valuation - The stock market's value has risen significantly, with the Buffett Indicator reaching levels last seen before the 2022 bear market, signaling potential overvaluation [2][3] - The ratio of total market capitalization to GDP indicates that the stock market is overheating, despite recent GDP growth [3] Dividend Investing - Dividend exchange-traded funds (ETFs) are gaining attention as investors seek stable income amidst market uncertainty [4] - Not all dividend stocks are equal; high-yield stocks provide current income, while those with dividend growth indicate quality investing [5] - The dividend yield on the S&P 500 is at its lowest since the dotcom bubble, prompting a shift towards higher-yielding dividend ETFs [5] ETFs Overview - **First Trust Dow Jones Global Select Dividend Index Fund (FGD)**: Up 0.2% in the past month, yields 4.95% annually, with fees of 56 bps [6] - **First Trust Morningstar Dividend Leaders Index Fund (FDL)**: Up 0.8% in the past month, yields 4.67% annually, with fees of 43 bps [7] - **iShares International Select Dividend ETF (IDV)**: Up 0.7% in the past month, yields 4.64% annually, with fees of 50 bps [8] - **State Street SPDR Portfolio S&P 500 High Dividend ETF (SPYD)**: Down 2.2% in the past month, yields 4.56% annually, with fees of 7 bps [9] - **Amplify CWP Enhanced Dividend Income ETF (DIVO)**: Down 1% in the past month, yields 4.58% annually, with fees of 56 bps [10]