Key Points The S&P 500 is historically expensive. The last time the S&P 500 was this expensive was during the dot-com bubble. 10 stocks we like better than S&P 500 Index › The Shiller price-to-earnings (P/E) ratio, or CAPE ratio, is a measure of how expensive the S&P 500 (SNPINDEX: ^GSPC) is. At the time of this writing, the Shiller P/E ratio is just over 40 -- a mark it has hit only once before -- in the thick of the dot-com bubble. Unfortunately, we know how the dot-com bubble played out, with t ...

Core Insights - Berkshire Hathaway's recent operating results indicate a potential warning for the stock market, particularly highlighted by a significant cash reserve of $344 billion, which suggests challenges in finding value in a high-priced market [3][10]. Group 1: Company Performance - Warren Buffett has led Berkshire Hathaway for 60 years, achieving a cumulative return of 5,637,640% for Class A shares, significantly outperforming the S&P 500's 42,500% gain over the same period [2]. - The company has a portfolio valued at $293 billion, consisting of over three dozen stocks, which investors closely monitor for potential investment opportunities [5]. - Despite positive cash flow from its owned businesses, Berkshire has been a net seller of stocks for 11 consecutive quarters, totaling $177.4 billion, indicating a struggle to find attractive investments [9]. Group 2: Market Valuation Concerns - The cash, cash equivalents, and U.S. Treasuries on Berkshire's balance sheet reached $344.1 billion, which is 1% below its all-time high and more than triple the $105.4 billion reported in June 2022 [8]. - The market-cap-to-GDP ratio, known as the "Buffett Indicator," reached over 210% in late July, representing a nearly 150% premium compared to its historical average since 1970, signaling unsustainable stock valuations [10]. - The S&P 500's Shiller price-to-earnings (P/E) ratio is at its third-highest level in 154 years, further supporting the notion that stock prices are excessively high [11]. Group 3: Investment Strategy - Buffett's investment philosophy emphasizes patience and waiting for favorable valuations, which has been a consistent strategy throughout his career [12][17]. - Historical examples, such as the investment in Bank of America during the financial crisis, illustrate the potential long-term benefits of this patient approach, leading to significant returns [15][16]. - The company remains focused on investing in strong businesses at fair prices, reflecting a long-term growth perspective in the U.S. economy and stock market [14].