Latest news with #GregAbel
Yahoo
a day ago
- Business
- Yahoo
Could Buying Berkshire Hathaway Stock Today Set You Up for Life?
Berkshire Hathaway has achieved nearly 20% annualized returns over the past six decades. It owns numerous businesses across a wide array of industries and holds a substantial cash stockpile. Buffett will be stepping down as CEO at the end of the year, and Greg Abel will assume the top role. 10 stocks we like better than Berkshire Hathaway › Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) has delivered exceptional returns over the past 60 years thanks to the leadership and investing acumen of CEO Warren Buffett and the late Charlie Munger. The two built Berkshire into a respected global conglomerate, exemplifying the value of long-term, strategic investing, and created substantial wealth for investors along the way. The company's disciplined, value-oriented investment approach focuses on businesses with strong economic moats and competitive advantages for sustainable growth. Its long-term success is a reason why many investors closely follow Berkshire's investment portfolio for inspiration. As Warren Buffett hands leadership to Greg Abel, questions arise about Berkshire's future. While the company has excelled up until now, could investing in Berkshire Hathaway today set you up for life? Let's dive into the expansive business and its competitive moat to find out. Berkshire Hathaway embodies the success of long-term, value-oriented investing. It's largely recognized for Warren Buffett's long-held positions in companies such as Coca-Cola and American Express. However, its true strength comes from its diverse operations, especially its insurance segment, which is a key revenue source. Berkshire's insurance business acts as an engine for its portfolio, generating income through upfront premium collections while claims are paid out later. This creates a "float" -- a cash reserve that can be invested in Treasuries or other short-term, safe instruments, thereby boosting overall revenue. For example, last year, its insurance underwriting business generated $9 billion in earnings, while its insurance investment income contributed $13.7 billion in earnings. The benefits of this approach are particularly pronounced during periods of rising interest rates. For example, Berkshire's $13.7 billion in investment income last year was more than double what it earned in 2022, highlighting how its large insurance business can help the company do well in various economic conditions. In addition, Berkshire Hathaway owns numerous companies across various industries, including transportation, such as railroads, where 28% of all freight in the U.S. is still transported. It also owns consumer goods brands, like Dairy Queen, See's Candies, Duracell, and Fruit of the Loom. It also has exposure to utilities and energy through Berkshire Hathaway Energy. Investors considering Berkshire Hathaway amid recent leadership changes may feel both anticipation and uncertainty. In November 2023, the company lost Charlie Munger, a key figure; meanwhile, Warren Buffett is set to step down as CEO at the end of this year. The transition marks a significant change for the company. Buffett has announced that Greg Abel will become CEO, a role he has prepared for since joining Berkshire in the late 1990s. Abel's success will depend on maintaining the long-term investment philosophy and culture established by Buffett and Munger. Additionally, Todd Combs and Ted Weschler, who joined Berkshire as investment managers in 2010 and 2012, respectively, will assume a more significant role in managing Berkshire's extensive portfolio. Before joining Berkshire Hathaway, Combs ran Castle Point Management from 2005 to 2010, achieving a cumulative return of 34% and beating the Great Recession bear market in the process. Meanwhile, Weschler's impressive investment track record is evident in his transformation of a $70,000 Roth IRA into $264 million over three decades, along with returns of 1,236% at Peninsula Capital Advisors from 1999 to 2011. Combs and Weschler were instrumental in getting Berkshire Hathaway to invest in Apple in 2016, which has since become one of the conglomerate's best-performing stocks over the past decade. Now, they will have a chance to carry on Berkshire's investing legacy. I think Berkshire is one of the best stocks investors could buy today. To me, investing in Berkshire is akin to investing in a diversified portfolio of stocks, given its extensive holdings of privately held businesses across various industries, which continue to deliver solid returns. That said, as much as I like Berkshire for its wide-ranging business and massive cash pile, investors should ensure that they aren't too reliant on any single stock to build their wealth. Most importantly, investors should develop the habit of consistently investing in high-quality companies, such as Berkshire Hathaway, as part of a diversified approach to building up wealth over time. Before you buy stock in Berkshire Hathaway, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Berkshire Hathaway wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $658,297!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $883,386!* Now, it's worth noting Stock Advisor's total average return is 992% — a market-crushing outperformance compared to 172% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 9, 2025 American Express is an advertising partner of Motley Fool Money. Courtney Carlsen has positions in American Express and Berkshire Hathaway. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy. Could Buying Berkshire Hathaway Stock Today Set You Up for Life? was originally published by The Motley Fool Sign in to access your portfolio
Yahoo
a day ago
- Business
- Yahoo
Warren Buffett's stock is getting cheaper! Is this an opportunity for investors?
Since Warren Buffett announced his intention to retire at the end of 2025, Berkshire Hathaway's (BRK-B) (NYSE:BRK.B) shares have become noticeably cheaper, with both Class A and B shares falling by around 8% from their all-time highs, underperforming the broader S&P 500 (^GSPC), which has risen over the same period. This pullback may reflect investor anxiety about the post-Buffett era, despite his successor Greg Abel's strong operational credentials. But there are likely factors at play. Berkshire Hathaway is a vast American conglomerate, famous for its unique structure and Buffett's legendary value investing approach. The company's operations span insurance (GEICO, Gen Re), railways (BNSF), utilities and energy (Berkshire Hathaway Energy), manufacturing (Precision Castparts, Duracell), and retail (Dairy Queen, See's Candies). In addition to wholly-owned businesses, Berkshire manages an enormous portfolio of publicly traded equities, with its largest holdings including Apple, American Express, Coca-Cola, Bank of America, and Chevron. These five stocks alone account for over 62% of its equity portfolio. For a period, Apple accounted for over half of this portfolio. Clearly, concentration risk wasn't a huge concern for Buffett. Financially, Berkshire sits atop a colossal cash pile, with $333bn in cash and short-term investments, including over $300bn in US Treasury bills as of Q1 2025. This immense liquidity provides a buffer against market shocks and positions the company to seize opportunities during downturns. However, the company's first-quarter earnings fell short of expectations, and the recent leadership transition has led to investor caution and profit-taking after a strong multi-year rally. Despite its diversification, Berkshire remains heavily US-focused, with the majority of its revenues and assets tied to the American economy. This domestic concentration means it's particularly sensitive to US economic trends, such as inflation and growth. According to the Federal Reserve's model, a $10 increase in oil prices could push US inflation up by 0.4% and slow growth by a similar margin, underscoring the macroeconomic risks Berkshire faces as a predominantly American enterprise. Berkshire Hathaway stands out for its remarkable long-term performance. The shares saw an average annual gain of 19.9% since 1965, far outpacing the S&P 500's 10.4% over the same period. It has continued to outperform major indices since the start of the pandemic despite holding a limited number of technology giants — these are the stocks that have really taken the US indices higher. Personally, I'm investing in Berkshire for the long run and, as such, I'm quite happy to take advantage of dips like this. I appreciate concern about Buffett's retirement may dampen sentiment for some time, but I doubt the core investment proposition will change — this is about a diversified investment in the US economy. I believe investors should consider Berkshire Hathaway, especially as the stock pulls back. The post Warren Buffett's stock is getting cheaper! Is this an opportunity for investors? appeared first on The Motley Fool UK. More reading 5 Stocks For Trying To Build Wealth After 50 One Top Growth Stock from the Motley Fool Bank of America is an advertising partner of Motley Fool Money. American Express is an advertising partner of Motley Fool Money. James Fox has positions in Berkshire Hathaway. The Motley Fool UK has recommended Apple. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Motley Fool UK 2025 Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
a day ago
- Business
- Yahoo
'It's not taxed at all': Warren Buffett shared the 'best investment' you can make to fight inflation
Moneywise and Yahoo Finance LLC may earn commission or revenue through links in the content below. With an estimated net worth of $161.8 billion, Warren Buffett, the CEO of Berkshire Hathaway, has built a tremendous financial empire. Now, At 94 years old, Warren Buffett has finally decided to retire from his longtime post, having announced the decision at the company's annual shareholder meeting in early May. Vice-chair Greg Abel will take over the top job as of Jan. 1, 2026, and Buffett will remain as chairman. With a net worth like his, you might anticipate Buffett living a lavish retirement. But unlike the high-roller lifestyles of other extremely rich celebrities and business people, Warren Buffett lives by smart — and surprisingly simple — investment philosophies that have positively influenced millions of investors around the world. One of his most famous rules is to buy and hold for as long as possible. 'You've got to be prepared when you buy a stock to have it go down 50% or more, and be comfortable with it… but some people are not really careful. Some people are more subject to fear than others.' Thanks to Jeff Bezos, you can now become a landlord for as little as $100 — and no, you don't have to deal with tenants or fix freezers. Here's how BlackRock CEO Larry Fink has an important message for the next wave of American retirees — here's how he says you can best weather the US retirement crisis Nervous about the stock market in 2025? Find out how you can access this $1B private real estate fund (with as little as $10) At the 2022 Berkshire Hathaway annual shareholder's meeting, Buffet said 'Whatever abilities you have can't be taken away from you. They can't be inflated away from you,' he said. 'The best investment by far is anything that develops yourself, and it's not taxed at all.' While this isn't a traditional investment tip, Buffett firmly believes that by regularly investing in knowledge and self-improvement, you yourself become an asset and can more easily access opportunities for growing your wealth. Even now, Buffett has wise investment advice for investors seeking to shield their wealth and even grow it while keeping their tax obligations low. Here are some of his top investing strategies. Real estate is generally a 'good investment' during times of inflation, according to Buffett. 'They're the businesses that you buy once and then you don't have to keep making capital investments subsequently. So, you do not face the problem of continuous reinvestments involving greater and greater dollars because of inflation,' he said during the 2015 Berkshire Hathaway shareholders meeting. But, while real estate might be a good investment, its barrier to entry can be difficult to cross. Luckily, there are plenty of platforms out there that allow you to invest in real estate with ease. First National Realty Partners makes it easy for accredited investors to diversify through opportunities in grocery-anchored, necessity-based retail space. Through FNRP's online platform, accredited investors can potentially collect quarterly cash flow through a diverse real estate portfolio. New investing platforms are making it easier than ever to tap into the real estate market. For accredited investors, Homeshares gives access to the $36 trillion U.S. home equity market, which has historically been the exclusive playground of institutional investors. With a minimum investment of $25,000, investors can gain direct exposure to hundreds of owner-occupied homes in top U.S. cities through their U.S. Home Equity Fund — without the headaches of buying, owning or managing property. With risk-adjusted internal returns ranging from 14% to 17%, this approach provides an effective, hands-off way to invest in owner-occupied residential properties across regional markets. Read more: Rich, young Americans are ditching the stormy stock market — Buffett has been around the block a few times, experiencing many highs and lows in the U.S. economy. He has managed a stock portfolio through periods of double-digit inflation rates in the 1970s and has plenty of insight on what to own when consumer prices spike. Buffett likes high-quality businesses with low capital needs, such as Apple. The technology company boasts some impressive financial metrics — a testament to the company's efficiency, strength and negotiating power — which have enabled it to thrive during this period of inflation. While Buffett is known for being uninterested in gold investing — describing it in a 2011 letter to shareholders as an asset 'that will never produce anything' — other money mavens consider it to be a solid hedge against inflation because its purchasing power has remained relatively stable over time. Opting for a gold IRA gives you the opportunity to hedge against market volatility by allowing you to invest directly in physical precious metals rather than stocks and bonds. If you'd like to convert an existing IRA into a gold IRA, companies typically offer 100% free rollover. Priority Gold is an industry leader in precious metals, offering physical delivery of gold and silver. Plus, they have an A+ rating from the Better Business Bureau and a 5-star rating from Trust Link. If you'd like to convert an existing IRA into a gold IRA, Priority Gold offers 100% free rollover, as well as free shipping, and free storage for up to five years. Qualifying purchases will also receive up to $10,000 in free silver. To learn more about how Priority Gold can help you reduce inflation's impact on your nest egg, download their free 2025 gold investor bundle. JPMorgan sees gold soaring to $6,000/ounce — use this 1 simple IRA trick to lock in those potential shiny gains (before it's too late) This tiny hot Costco item has skyrocketed 74% in price in under 2 years — but now the retail giant is restricting purchases. Here's how to buy the coveted asset in bulk This is how American car dealers use the '4-square method' to make big profits off you — and how you can ensure you pay a fair price for all your vehicle costs Millions of Americans now sit on a stunning $35 trillion in home equity — here's 1 new way to invest in responsible US homeowners This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
Yahoo
4 days ago
- Business
- Yahoo
Billionaire Warren Buffett Has a $348 Billion Dilemma -- and His Decision Is Only Getting Tougher
Warren Buffett has been a net seller of stocks for two and a half years. Though Berkshire Hathaway's cash pile has ballooned to $348 billion, the historical priciness of equities is keeping Buffett firmly on the sidelines. While Buffett's patience may be unsettling to investors, his willingness to wait for price dislocations is what's made Berkshire's chief such a phenomenal asset manager. 10 stocks we like better than Berkshire Hathaway › There isn't a money manager on Wall Street who garners more attention from professional and everyday investors than Berkshire Hathaway's (NYSE: BRK.A)(NYSE: BRK.B) billionaire CEO Warren Buffett. When you deliver an aggregate return for your company's Class A shares (BRK.A) of better than 5,910,000% over six decades (as of the closing bell on June 11), you're going to draw a crowd. But the aptly dubbed "Oracle of Omaha" is also 94 years old and readying to hang up his proverbial work coat. During Berkshire's annual shareholder meeting in early May, Buffett announced his plan to step down as the company's CEO by the end of the year and hand over the reins to predetermined successor Greg Abel. Though Warren Buffett's time at the helm is limited, it doesn't change the fact that he's facing a $348 billion dilemma, which is seemingly getting tougher by the day. Most investors follow Buffett to get a bead on which stocks he's been buying and selling -- with far more interest in the former than the latter. Riding his coattails has been a profitable investing strategy for decades. While Buffett has, indeed, been purchasing shares of select companies on a quarterly basis, the theme of the last two and a half years is that of Berkshire's chief being a net seller of equities. Berkshire Hathaway's quarterly operating results contain a detailed consolidated cash flow statement that specifically lists "purchases of equity securities" and "sales of equity securities." Some simple arithmetic can allow anyone to decipher whether or not the Oracle of Omaha and his top investment advisors were net buyers or sellers of stocks in the latest quarter. During the March-ended quarter, Warren Buffett sold $1.494 billion more in stocks than was purchased. This marked the 10th consecutive quarter -- a stretch spanning from Oct. 1, 2022 to March 31, 2025 -- where Buffett was a net seller of stocks. On a cumulative basis, Berkshire's head honcho has disposed of $174.4 billion more in stocks than was purchased over this 30-month timeline. All the while, the roughly five dozen businesses Berkshire owns have remained sustainably profitable and continue to generate positive cash from operations. Put this net cash generation together with Buffett's persistent net-selling activity and you get Berkshire Hathaway's cash pile (which includes U.S. Treasuries) ballooning to $347.7 billion. For most companies, an exorbitant cash pile would be a luxury. But for Berkshire Hathaway's lead investor, it's indicative of a dilemma that shows no signs of resolution anytime soon. In an ideal world, the Oracle of Omaha would prefer to put most of his company's capital to work via large investments or acquisitions that would move the needle. Keep in mind that at least $30 billion in combined cash, cash equivalents, and U.S. Treasuries needs to remain on Berkshire's balance sheet to conduct share buybacks, so Buffett won't be dipping below (or generally close to) this level. However, Berkshire's top investor is also unwavering in his desire to get a good deal. Regardless of a company's competitive advantages or rich history, Warren Buffett won't chase pricey stocks higher. He'll patiently sit on his hands and wait for price dislocations to crop up before diving in. Despite Berkshire's cash pile growing to a record $348 billion, Buffett has little-to-no incentive to put this capital to work amid the historic priciness of the stock market. Nearly a quarter of a century ago, in an interview with Fortune magazine, Buffett referred to the market cap-to-GDP ratio as "probably the best single measure of where valuations stand at any given moment." This valuation tool, which aggregates the value of all publicly traded stocks and divides it by U.S. gross domestic product (GDP), has come to be known as the "Buffett Indicator." When back-tested to 1970, the Buffett Indicator has averaged a reading of approximately 85%, which means the total value of all publicly traded stocks has equated to 85% of U.S. GDP. However, as of the closing bell on June 10, the Buffett Indicator was a few hundredths shy of 202%! It's also within a stone's throw of its all-time high of 205.55%, which was set in mid-February. Another broad-stroke valuation tool that demonstrates what little value can be found on Wall Street at the moment is the S&P 500's (SNPINDEX: ^GSPC) Shiller price-to-earnings (P/E) Ratio, which may also be referred to as the cyclically adjusted P/E Ratio (CAPE Ratio). The Shiller P/E is based on average inflation-adjusted earnings over the prior 10 years. When back-tested to January 1871, the average Shiller P/E multiple is a touch over 17. As of the closing bell on June 11, the Shiller P/E sported a multiple of more than 37. Although this is down from a peak reading of 38.89 during the current bull market cycle, it marks the third-priciest multiple spanning 154 years. While the Shiller P/E offers no guidance on when stock market corrections will commence, it does have a flawless track record of foreshadowing eventual downside of 20% or more in Wall Street's major stock indexes, including the S&P 500, when surpassing a multiple of 30. Historically, putting Berkshire Hathaway's capital to work has helped the company grow its sales and/or profits. But until valuation multiples stop going up, it's unlikely that Warren Buffett will be doing much of anything on the investment front, which suggests Berkshire's cash pile is going to continue to expand. However, this isn't necessarily a bad thing -- even if investors are growing weary of the Oracle of Omaha's net-selling activity. To use a baseball analogy, Buffett's outsized investment returns aren't a function of swinging at a lot of pitches. Even though Berkshire Hathaway has more than enough capital that Buffett could, in theory, swing for the fences on a daily basis, his success has been based on waiting for the right pitch to enter his wheelhouse. Regardless of how long it takes, Buffett and his successor Greg Abel have demonstrated a willingness to remain on the sidelines until valuations make sense. For example, Buffett has been purchasing shares of satellite-radio operator Sirius XM Holdings (NASDAQ: SIRI), whose forward P/E ratio of a little over 7 is just shy of its all-time low as a publicly traded company of 31 years. Though Buffett's investment in Sirius XM isn't needle-moving, it's representative of the principles to which Buffett has aligned his investment philosophy. Sirius XM's legal monopoly status ensures its moat, and the company's ultra-low forward P/E presents as a price dislocation amid a historically expensive market. As I've pointed out before, patience paid off handsomely in August 2011 for Berkshire Hathaway and its shareholders when Buffett orchestrated a deal to infuse Bank of America (NYSE: BAC) with $5 billion to shore up its balance sheet. In return, Buffett's company netted $5 billion in BofA preferred stock yielding 6% annually, as well as warrants to purchase up to 700 million shares of Bank of America common stock at $7.14 per share. These warrants were executed in the summer of 2017, leading to an instant (unrealized) profit of $12 billion for Berkshire. Eventually, the lion's share of Berkshire Hathaway's $348 billion in cash will be put to work -- but this won't happen until price dislocations or unique, needle-moving situations present themselves. Before you buy stock in Berkshire Hathaway, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Berkshire Hathaway wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $653,702!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $870,207!* Now, it's worth noting Stock Advisor's total average return is 988% — a market-crushing outperformance compared to 172% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 9, 2025 Bank of America is an advertising partner of Motley Fool Money. Sean Williams has positions in Bank of America and Sirius XM. The Motley Fool has positions in and recommends Bank of America and Berkshire Hathaway. The Motley Fool has a disclosure policy. Billionaire Warren Buffett Has a $348 Billion Dilemma -- and His Decision Is Only Getting Tougher was originally published by The Motley Fool
Globe and Mail
4 days ago
- Business
- Globe and Mail
Billionaire Warren Buffett Has a $348 Billion Dilemma -- and His Decision Is Only Getting Tougher
There isn't a money manager on Wall Street who garners more attention from professional and everyday investors than Berkshire Hathaway 's (NYSE: BRK.A)(NYSE: BRK.B) billionaire CEO Warren Buffett. When you deliver an aggregate return for your company's Class A shares (BRK.A) of better than 5,910,000% over six decades (as of the closing bell on June 11), you're going to draw a crowd. But the aptly dubbed "Oracle of Omaha" is also 94 years old and readying to hang up his proverbial work coat. During Berkshire's annual shareholder meeting in early May, Buffett announced his plan to step down as the company's CEO by the end of the year and hand over the reins to predetermined successor Greg Abel. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » Though Warren Buffett's time at the helm is limited, it doesn't change the fact that he's facing a $348 billion dilemma, which is seemingly getting tougher by the day. Warren Buffett has been a net seller of stocks since October 2022 Most investors follow Buffett to get a bead on which stocks he's been buying and selling -- with far more interest in the former than the latter. Riding his coattails has been a profitable investing strategy for decades. While Buffett has, indeed, been purchasing shares of select companies on a quarterly basis, the theme of the last two and a half years is that of Berkshire's chief being a net seller of equities. Berkshire Hathaway's quarterly operating results contain a detailed consolidated cash flow statement that specifically lists "purchases of equity securities" and "sales of equity securities." Some simple arithmetic can allow anyone to decipher whether or not the Oracle of Omaha and his top investment advisors were net buyers or sellers of stocks in the latest quarter. During the March-ended quarter, Warren Buffett sold $1.494 billion more in stocks than was purchased. This marked the 10th consecutive quarter -- a stretch spanning from Oct. 1, 2022 to March 31, 2025 -- where Buffett was a net seller of stocks. On a cumulative basis, Berkshire's head honcho has disposed of $174.4 billion more in stocks than was purchased over this 30-month timeline. All the while, the roughly five dozen businesses Berkshire owns have remained sustainably profitable and continue to generate positive cash from operations. Put this net cash generation together with Buffett's persistent net-selling activity and you get Berkshire Hathaway's cash pile (which includes U.S. Treasuries) ballooning to $347.7 billion. For most companies, an exorbitant cash pile would be a luxury. But for Berkshire Hathaway's lead investor, it's indicative of a dilemma that shows no signs of resolution anytime soon. Buffett is an unwavering value investor who's navigating a historically pricey stock market In an ideal world, the Oracle of Omaha would prefer to put most of his company's capital to work via large investments or acquisitions that would move the needle. Keep in mind that at least $30 billion in combined cash, cash equivalents, and U.S. Treasuries needs to remain on Berkshire's balance sheet to conduct share buybacks, so Buffett won't be dipping below (or generally close to) this level. However, Berkshire's top investor is also unwavering in his desire to get a good deal. Regardless of a company's competitive advantages or rich history, Warren Buffett won't chase pricey stocks higher. He'll patiently sit on his hands and wait for price dislocations to crop up before diving in. Despite Berkshire's cash pile growing to a record $348 billion, Buffett has little-to-no incentive to put this capital to work amid the historic priciness of the stock market. Nearly a quarter of a century ago, in an interview with Fortune magazine, Buffett referred to the market cap-to-GDP ratio as "probably the best single measure of where valuations stand at any given moment." This valuation tool, which aggregates the value of all publicly traded stocks and divides it by U.S. gross domestic product (GDP), has come to be known as the " Buffett Indicator." Warren Buffett Indicator jumps to 200% and is now just 2 percentage points away from the most expensive stock market valuation in history 🚨🚨 -- Barchart (@Barchart) June 10, 2025 When back-tested to 1970, the Buffett Indicator has averaged a reading of approximately 85%, which means the total value of all publicly traded stocks has equated to 85% of U.S. GDP. However, as of the closing bell on June 10, the Buffett Indicator was a few hundredths shy of 202%! It's also within a stone's throw of its all-time high of 205.55%, which was set in mid-February. Another broad-stroke valuation tool that demonstrates what little value can be found on Wall Street at the moment is the S&P 500 's (SNPINDEX: ^GSPC) Shiller price-to-earnings (P/E) Ratio, which may also be referred to as the cyclically adjusted P/E Ratio (CAPE Ratio). The Shiller P/E is based on average inflation-adjusted earnings over the prior 10 years. When back-tested to January 1871, the average Shiller P/E multiple is a touch over 17. As of the closing bell on June 11, the Shiller P/E sported a multiple of more than 37. Although this is down from a peak reading of 38.89 during the current bull market cycle, it marks the third-priciest multiple spanning 154 years. While the Shiller P/E offers no guidance on when stock market corrections will commence, it does have a flawless track record of foreshadowing eventual downside of 20% or more in Wall Street's major stock indexes, including the S&P 500, when surpassing a multiple of 30. Patience is a virtue and a path to profits for the Oracle of Omaha Historically, putting Berkshire Hathaway's capital to work has helped the company grow its sales and/or profits. But until valuation multiples stop going up, it's unlikely that Warren Buffett will be doing much of anything on the investment front, which suggests Berkshire's cash pile is going to continue to expand. However, this isn't necessarily a bad thing -- even if investors are growing weary of the Oracle of Omaha's net-selling activity. To use a baseball analogy, Buffett's outsized investment returns aren't a function of swinging at a lot of pitches. Even though Berkshire Hathaway has more than enough capital that Buffett could, in theory, swing for the fences on a daily basis, his success has been based on waiting for the right pitch to enter his wheelhouse. Regardless of how long it takes, Buffett and his successor Greg Abel have demonstrated a willingness to remain on the sidelines until valuations make sense. For example, Buffett has been purchasing shares of satellite-radio operator Sirius XM Holdings (NASDAQ: SIRI), whose forward P/E ratio of a little over 7 is just shy of its all-time low as a publicly traded company of 31 years. Though Buffett's investment in Sirius XM isn't needle-moving, it's representative of the principles to which Buffett has aligned his investment philosophy. Sirius XM's legal monopoly status ensures its moat, and the company's ultra-low forward P/E presents as a price dislocation amid a historically expensive market. As I've pointed out before, patience paid off handsomely in August 2011 for Berkshire Hathaway and its shareholders when Buffett orchestrated a deal to infuse Bank of America (NYSE: BAC) with $5 billion to shore up its balance sheet. In return, Buffett's company netted $5 billion in BofA preferred stock yielding 6% annually, as well as warrants to purchase up to 700 million shares of Bank of America common stock at $7.14 per share. These warrants were executed in the summer of 2017, leading to an instant (unrealized) profit of $12 billion for Berkshire. Eventually, the lion's share of Berkshire Hathaway's $348 billion in cash will be put to work -- but this won't happen until price dislocations or unique, needle-moving situations present themselves. Should you invest $1,000 in Berkshire Hathaway right now? Before you buy stock in Berkshire Hathaway, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Berkshire Hathaway wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $653,702!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $870,207!* Now, it's worth noting Stock Advisor 's total average return is988% — a market-crushing outperformance compared to172%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 9, 2025
