3 Crucial Warnings From The Oracle Of Omaha

In partnership with

Introduction

Warren Buffett isn’t just one of the greatest investors of all time. He’s a living masterclass in compounding. When he launched Buffett Partnership Ltd. in 1956, he quietly delivered returns so extraordinary that they would become Wall Street legend: more than 30% a year throughout the 1960s. And when he dissolved the partnership, he didn’t leave his investors hanging. Instead, he handed them shares of an obscure, struggling textile mill called Berkshire Hathaway — a company he would later transform into one of the most powerful compounding machines in corporate history.

Since then, Buffett has turned Berkshire into an empire, delivering nearly 20% annualized returns for almost six decades. Few investors have matched that longevity, discipline, or performance.

Now, as Buffett’s era at the helm of Berkshire Hathaway nears its close, his words carry even more weight. Through his annual letters, public comments, and investment decisions, he continues to offer investors a steady dose of wisdom and, occasionally, warnings.

Today, he’s sounding three clear alarms about the current stock market. And they’re signals no investor can afford to ignore.

1. Berkshire’s Newest Record

Berkshire Hathaway has just set a staggering new record: as of the end of the third quarter, it’s sitting on $354.3 billion in cash and Treasury bills excluding railroad-related cash and Treasuries payable.

To put that into perspective, Berkshire’s entire marketable equity portfolio is currently worth about $314.5 billion. In other words, the world's most famous stock picker is now holding more cash than stocks.

This didn’t happen by accident. Berkshire has been steadily trimming some of its biggest winners, including Apple and Bank of America positions that have surged in value over the past few years. With valuations stretched, Buffett and his team appear to be signalling that prices no longer justify the risk. Selling now also lets them take advantage of today’s still-low corporate tax rates before they potentially rise.

Meanwhile, new stock purchases have been rare. And that creates an unusual challenge: with $354 billion to deploy, there are only a few opportunities large enough and attractive enough for Berkshire to meaningfully invest in.

2. Warren Buffet’s Surprising Move

For years, Berkshire Hathaway followed a rigid buyback rule: it would only repurchase shares when the stock traded below a predetermined valuation threshold. That changed in 2018, when the board scrapped the restriction and handed Buffett full discretion to buy back shares whenever he believed Berkshire was priced below its intrinsic value.

What followed was telling. Buffett turned buybacks into a near-quarterly habit, quietly signalling his confidence in Berkshire’s long-term value.

But that confidence has noticeably paused. Berkshire hasn’t repurchased a single share since early 2024 despite sitting on one of the largest cash piles in corporate history.

This isn’t a cash problem. It’s a valuation problem.

Buffett’s silence on buybacks is effectively an admission that even Berkshire’s own stock doesn’t look compelling at today’s prices. When the company’s most disciplined buyer refuses to buy, investors should take note.

Buffett’s reluctance to buy back Berkshire shares doesn’t just reflect one company’s valuation, it reflects the tone of the entire market. When even Berkshire, with its diversified earnings engine, looks too expensive to its own legendary buyer, it’s a sign of something broader: prices across the market have been pushed up far beyond what fundamentals justify.

Many companies with little exposure to real, sustainable growth trends are trading at levels that simply don’t match their earnings power. In other words, investors are paying growth-stock prices for businesses that aren’t delivering growth.

And Buffett’s message couldn’t be clearer: in a market this stretched, caution isn’t optional, it’s essential

3. Unleashing The Power

Back in 2001, Warren Buffett wrote a now-famous Fortune article highlighting one of his favourite tools for assessing whether the stock market is overvalued. The calculation is simple: take the total market value of all publicly traded U.S. businesses and divide it by the nation’s gross national product. Today, it’s widely known as the Buffett Indicator.

Buffett acknowledged that the metric has limitations, but he also called it “the best single measure of where valuations stand at any given moment.” And he issued a clear warning: when the ratio approaches 200% as it did at the peak of the dot-com bubble, investors are “playing with fire.”

Right now, that ratio sits at roughly 223%.

Yes, there are reasons valuations should be structurally higher today: persistently low interest rates, global demand for U.S. equities, and a surge in long-term investment flows. But these forces don’t fully offset the reality that many large American businesses are staying private longer, keeping significant economic value outside the public markets. Even after adjusting for these shifts, the Buffett Indicator is signalling the same message: U.S. stocks look extremely expensive.

The Bottom Line

Taken together, the signals are impossible to ignore. Berkshire Hathaway’s record cash hoard, the halt in buybacks, the trimming of long-time winners, and a Buffett Indicator deep into “danger zone” territory all point to the same uncomfortable truth: Warren Buffett sees a market priced for perfection — and offering very few genuinely attractive opportunities.

This isn’t fear. It’s discipline.

For nearly 6 decades, Buffett has outperformed not by chasing what’s popular, but by waiting patiently for moments when great businesses trade at sensible prices. Today, he’s telling investors through action far more than words, that this is not one of those moments.

For us as investors, the lesson is clear:
Curb expectations, raise standards, and be selective.
In a market where valuations are stretched and fundamentals often lag behind excitement, the edge goes to investors who slow down, dig deeper, and refuse to overpay.

Buffett has built his career on the idea that opportunities always return and that the real money is made by those prepared when they do. Following that mindset now may be the difference between surviving the next correction and capitalising on it.

In a market full of noise, Buffett’s actions remain the clearest signal.

Happy Investing!!