Warren Buffett warns of expensive stock valuations, increases cash reserves, potential market downturn.

From Nasdaq: 2025-05-18 15:10:00

The bull market continued last year, with investors favoring high growth stocks, especially in artificial intelligence. Warren Buffett, however, issued a warning by selling stocks, increasing cash reserves to over $347 billion. Historical patterns show that S&P 500 performance declined after previous Buffett warnings, suggesting a potential market downturn.

Buffett’s success stems from investing in understandable companies at reasonable prices for the long term. His caution in 2024 reflects expensive stock valuations, as seen in the S&P 500 Shiller CAPE ratio. History shows that after Buffett’s warnings, the S&P 500 declined, indicating a possible market correction following his recent actions.

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Read more at Nasdaq: Warren Buffett’s $347 Billion Warning to Wall Street Is Ringing Out Loud and Clear. History Says This Happens Next.