Even though the Oracle of Omaha has been a net seller of stocks for 11 straight quarters, there's one brand name company sporting a price dislocation he can't resist.For the better part of 60 years, Berkshire Hathaway's (BRK.A -0.13%) (BRK.B -0.06%) billionaire CEO Warren Buffett has been outpacing the benchmark S&P 500 (^GSPC 1.52%) with ease. Whereas the stock market's broad-based index has gained close to 42,500%, including dividends, over the last six decades, the aptly nicknamed Oracle of Omaha has ove ...

Core Insights - The stock market has experienced significant volatility in 2025, with notable declines followed by a strong bull market, raising concerns about high valuations [2][3][19] - The market cap-to-GDP ratio, known as the "Buffett Indicator," has reached unprecedented levels, indicating that the stock market is more expensive than ever before, surpassing previous peaks during the Dot Com Bubble and the Global Financial Crisis [10][11][12] Valuation Metrics - The traditional price-to-earnings (P/E) ratio is commonly used for stock valuation, but it may not be as effective during recessions or for growth stocks [7][8] - The Buffett Indicator, which compares the total market capitalization of publicly traded companies to U.S. GDP, has recently exceeded 213%, representing a 151% premium over its historical average of 85% since 1970 [9][11] Historical Context - Historical data shows that when the Buffett Indicator reaches new highs, it is often followed by significant market pullbacks, as seen in previous instances leading to bear markets [12][13] - Warren Buffett has been a net seller of stocks for ten consecutive quarters, totaling $174.4 billion, indicating a cautious approach to current market valuations [14] Market Cycles - The average U.S. recession lasts about 10 months, while economic expansions typically last around five years, suggesting that market downturns are often short-lived [18][21] - Despite high valuations, historical trends indicate that major indices like the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average tend to rise over long-term periods [22]