Warren Buffett is undoubtedly one of the most influential figures in modern finance. Under his leadership, Berkshire Hathaway evolved from a small textile manufacturer into one of the largest conglomerates in the world. Buffett’s patient, value-oriented investments were essential to that transformation.
One way to quantify his success is to examine Berkshire’s returns when he led the company. Between 1965 and 2025, the stock gained almost 20% annually, crushing the S&P 500 (SNPINDEX: ^GSPC), which added about 11% annually during the same period.
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Last December, after six decades at the helm, Buffett retired and handed the CEO position at Berkshire to Greg Abel. Despite stepping back from the media spotlight, Buffett did pass a warning to investors during a recent CNBC interview, and it could haunt Wall Street for years.
Warren Buffett says investors are treating the stock market like a casino
Warren Buffett, now 95 years old, sat down for an interview with CNBC in May. He talked about everything from nuclear weapons and geopolitical risk to artificial intelligence (AI) and the macroeconomic environment. But a few comments stood out.
While discussing the market’s increasingly speculative behavior, Buffett said, “We’ve never had people in a more gambling mood than now.” He also warned that some investors were treating the stock market like a casino, making irresponsible bets that have left an awful lot of valuations looking “very silly.”
Buffett has issued similar warnings before, so investors may be tempted to brush aside his most recent comments. Unfortunately, a respected stock market indicator just sounded an alarm that lends credence to Buffett’s casino analogy, and it hints at trouble for Wall Street in the years ahead.
The S&P 500’s CAPE ratio is extremely high by historical standards
In 1988, Nobel Prize-winning economist Robert Shiller and his colleague John Campbell introduced the cyclically adjusted price-to-earnings (CAPE) ratio. The metric was designed to determine whether entire stock market indexes were overvalued, and it correctly predicted the dot-com crash around the turn of the century.
Unlike traditional price-to-earnings multiples, which are based on earnings from the last four quarters, CAPE multiples are based on average inflation-adjusted earnings from the last 10 years, which eliminates cyclical noise and smooths the effects of economic cycles.
