Core Viewpoint - The "Buffett Indicator," a key valuation metric praised by Warren Buffett, suggests that the overall valuation of the U.S. stock market is currently relatively cheap, supporting the view that the strong rebound in U.S. stocks since April may continue in the long term despite the ongoing trade tensions initiated by the Trump administration [1][3]. Valuation Metrics - The "Buffett Indicator," which measures the total market value of U.S. stocks against the U.S. GDP, currently stands at 180%, the lowest level since early September, indicating that U.S. stock valuations are relatively inexpensive [1][3]. - This indicator is calculated by dividing the total market capitalization of the Wilshire 5000 Index by the U.S. GDP, and it remains above the typical levels seen during market bottoms, such as the near 100% level during the COVID-19 pandemic sell-off in early 2020 [1][5]. Market Reactions - The S&P 500 index has rebounded by 12% since reaching a low in April, prompting traders to consider whether to continue betting on upward momentum or to buy on dips [3][4]. - Berkshire Hathaway, led by Buffett, has significantly outperformed the S&P 500 index, showcasing its status as a "safe haven" during market turmoil, with a market capitalization exceeding $1 trillion [6][7]. Investor Sentiment - Investors are preparing for upcoming earnings seasons and Federal Reserve meetings, which could influence the trends of U.S. and global stock markets [4]. - The importance of quantitative valuation metrics has increased this year as investors seek to determine if stock prices have become more attractive relative to fundamentals due to tariff-induced sell-offs [3][5]. Berkshire Hathaway's Position - Berkshire Hathaway's stock has risen nearly 17% this year, outperforming the S&P 500, which has declined by nearly 5% [7]. - The company holds a record cash reserve of $334.2 billion, enhancing its appeal as a safe investment during volatile market conditions [6][7].