Warren Buffett is one of history’s most accomplished investors.
As the longtime leader of Berkshire Hathaway, the “Oracle of Omaha” transformed a textile firm into a sprawling investment conglomerate through decades of disciplined capital allocation
Smart investors recognize that Buffett’s track record offers a rare demonstration of sustained wealth creation: From 1965 through 2025, Berkshire’s market value compounded at an annual rate of 19.7%, far outpacing the S&P 500’s (SNPINDEX: ^GSPC) 10.5% pace over the same span. This performance underscores the power of patient, value-oriented ownership. Yet in recent years, Buffett has observed that finding genuine opportunities at a reasonable price has grown difficult precisely because so many investors now prefer “gambling” — noting the surge in short-term speculative growth stocks and the cultural tilt toward cultivating day trading rather than long-term investing.
Such comments raise important questions about the near-term path of the stock market, where elevated valuations usually leave little margin for error if sentiment shifts. The CAPE ratio can tell you if the stock market is overvalued Buffett’s intuition that a gambling mindset is permeating throughout the capital markets is supported by the cyclically adjusted price-to-earnings (CAPE) ratio. Developed by economist Robert Shiller, this ratio divides the market’s current price level by the average of its inflation-adjusted earnings over the last 10 years.