Warren Buffett’s favored stock market valuation gauge, known as the Buffett Indicator, has recently declined, suggesting a potential buying opportunity following April’s market volatility. This indicator, which compares the total market capitalization of U.S. stocks to U.S. GDP, has dropped to around 180%, though it remains elevated compared to past market bottoms. The indicator surpassed 200% in late 2024, reaching levels seen during the pandemic and the dot-com bubble. Despite the decline, analysts remain cautious, noting that a lasting rally may depend on concrete trade deals from the White House. Morgan Stanley anticipates the S&P 500 will remain range-bound until the Federal Reserve cuts rates, earnings revisions improve, and Treasury bond yields ease. Berkshire Hathaway ended 2024 with a record $334 billion in cash, protecting it from tariff-related damage. Many of Buffett’s preferred stocks outperform the market this year, with Berkshire shares up 17%. Investors will gather in Omaha this weekend for Berkshire’s annual meeting.
— new from Business Insider
