The S&P 500's cyclically adjusted price-to-earnings ratio is approaching its highest level in 155 years, echoing Warren Buffett's recent warning that investors are buying 'nothing but hope.' The CAPE ratio currently stands at 41, more than double its long-term average of 17.8, and is on the verge of surpassing its dot-com era peak of 44. Buffett, in a CNBC interview, noted that speculative buying has overtaken fundamental analysis, while his Berkshire Hathaway has been a net seller of stocks, building record cash reserves. The article advises investors to focus on dollar-cost averaging, high-quality companies, and maintaining cash reserves rather than chasing momentum.
Berkshire Hathaway IncBuffett's warning and Berkshire's net selling and record cash reserves align with cautious strategy.
