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The U.S. stock market had a wild ride in 2025, with a rocky start followed by momentum that just kept building — culminating in the S&P 500 hitting record highs (1).
In fact, 2025 was so good for the market — in spite of the turbulence of tariffs in April and the pessimism of the Federal Reserve — that nearly every Wall Street firm predicted markets would keep it up in 2026 (2).
However, they weren’t counting on the White House starting a war in the Middle East, and volatility had flared as a result.
Meanwhile, on the home front, one gauge — popularized by none other than Warren Buffett — is flashing red, and it has been for some time.
The Buffett Indicator measures the total U.S. stock market capitalization against the country’s GDP — essentially gauging if there’s a potential bubble, akin to the 1999 dot-com burst (3). Buffett has so much faith in the indicator that he once told Fortune it was “probably the best single measure of where valuations stand at any given moment (4).”
Today, the Buffett Indicator stands at a whopping 230%, topping dot-com levels (5). According to the indicator, this suggests that the U.S. stock market is “Strongly Overvalued” compared to GDP.
Part of the indicator’s charm is that it’s easy to use and understand — especially for investors keen to time their buys.
In a 2001 reflection on the dot-com bust, Buffett offered a simple guide: “If the percentage relationship falls to the 70% or 80% area, buying stocks is likely to work very well for you. If the ratio approaches 200% — as it did in 1999 and a part of 2000 — you are playing with fire (6).”
So, if you’re concerned about what to do about it, here’s a look at how Buffett and others are reacting to the news — as well as three potential ports in the storm.
In response to heightened stock market valuation, Berkshire Hathaway, of which Buffett was the long-time CEO, has cooled in its attitude toward U.S. equities.
While Buffett said in a 2024 shareholder letter that, “Berkshire shareholders can rest assured that we will forever deploy a substantial majority of their money in equities (7),” Berkshire was a net seller of equities between 2024 and 2025, holding a massive $381.7 billion in cash as of September 2025 (8).
Since then, the company has moved to balance this slightly, but it still held $373.3 billion in cash at the end of 2025, or just 2.2% less than last year’s high.
In short, rather than buying up U.S. equities, the company is still hoarding cash.
And Buffett isn’t the only one who thinks that U.S. stocks look stretched. Federal Reserve chair Jerome Powell also warned in September 2025 that stocks were “fairly highly overvalued (9).”
More recently, Leon Cooperman, chairman and CEO of Omega Family Office, warned that U.S. stocks are dangerously overpriced, and that a market correction was nigh (10).
“The stock market is not discounting the uncertainty of the environment in a proper manner,” Cooperman said, referring to the war in Iran and other global economic uncertainty.
Many experts have been warning in the past weeks that the outcome of the war will be stagflation or a recession, especially if the global oil supply is threatened in the long term.
“The market doesn’t deserve to be where it’s selling,” Cooperman noted. “It’s too expensive.”
Read More: I’m almost 50 years old and don’t have retirement savings. Is it too late to catch up?
Read More: Non-millionaires can now invest in this $1B private real estate fund starting at just $10
If hoarding cash isn’t enough of a warning, the record performance of gold in 2025 is another sign that the wealthy are bracing for a rocky stock market.
Gold and silver have long served as classic hedges against inflation. Unlike fiat currency, precious metals can’t be created at will by central banks. And because their value isn’t tied to any single country, currency or economy, investors often turn to them during periods of market turbulence and geopolitical uncertainty.
Ray Dalio, founder of the world’s largest hedge fund, Bridgewater Associates, told CNBC earlier this year that people “don’t have, typically, an adequate amount of gold in their portfolio (11).”
“When bad times come, gold is a very effective diversifier,” he added.
Although gold has experienced recent pullbacks, for some investors, that could just make for an incentive to buy the dip.
If you’re looking for way to invest in this inflation-hedging asset, opening a gold IRA with the help of Thor Metals is one option for building up your retirement fund that can also provides significant tax advantages.
Gold IRAs allow investors to hold physical gold or gold-related assets within a retirement account, combining the tax advantages of an IRA with the protective benefits of gold, making it an attractive option for those looking to potentially hedge their retirement funds against economic uncertainties.
To learn more, you can get a free information guide that includes details on how to get up to $20,000 in free metals on qualifying purchases.
Like stocks, real estate has its cycles, but it doesn’t rely on a booming market to generate returns.
Even in a downturn, high-quality, essential real estate can continue to produce passive income through rent. In other words, you don’t have to wait for prices to rise to see a payoff — the asset itself can work for you.
Buffett has often pointed to real estate as a prime example of a productive, income-generating asset. In 2022, he stated that if you offered him “1% of all the apartment houses in the country” for $25 billion, he would “write you a check (12).”
But you don’t have to be Warren Buffett, or even take out a 30-year fixed-rate mortgage, to invest in real estate.
To many, investing in real estate means buying up properties — but most people don’t have that kind of capital just lying around.
However, you can now tap into this market by investing in shares of vacation homes or rental properties through Arrived with as little as $100.
Backed by world-class investors, including Jeff Bezos, Arrived allows you to invest in shares of vacation and rental properties, earning a passive income stream without the extra work that comes with being a landlord of your own rental property.
To begin, simply browse through their selection of pre-vetted properties, hand-picked for their potential appreciation and income generation. Once you choose a property, you can start investing now, potentially earning quarterly dividends.
If diversifying into multifamily rentals appeals to you, you could also consider investing with Lightstone DIRECT, a new investing platform from the Lightstone Group, one of the largest private real estate companies in the country with over 25,000 multifamily units in its portfolio.
Since they eliminate intermediaries — brokers and crowdfunding middlemen — accredited investors with a minimum investment of $100,000 can gain direct access to institutional-quality multifamily opportunities. This streamlined model can help reduce fees while enhancing transparency and control.
And with Lightstone DIRECT, you invest in single-asset multifamily deals alongside Lightstone — a true partner — as Lightstone puts at least 20% of its own capital into every offering. All of Lightstone’s investment opportunities undergo a rigorous, multi-stage review before being approved by Lightstone’s Principals, including Founder David Lichtenstein.
How it works is simple: Just sign up with your email, and you can schedule a call with a capital formation expert to assess your investment opportunities. From here, all you have to do is verify your details to begin investing.
Founded in 1986, Lightstone has a proven track record of delivering strong risk-adjusted returns across market cycles with a 27.6% historical net IRR and 2.54x historical net equity multiple on realized investments since 2004. All told, Lightstone has $12 billion in assets under management — including in industrial and commercial real estate.
As such, even if multifamily rentals don’t appeal to you, Lightstone could still serve you well as an investment vehicle for other real estate verticals.
Get started today with Lightstone DIRECT and invest alongside experienced professionals with skin in the game.
Volatility in the stock market is the top reason why all retirement portfolios need diversification, especially for those closer to retirement. A single downturn in stocks in your sixties can see you losing out on years of essential income in your final decades.
In 1999, the S&P 500 peaked, and it took 14 long years to fully recover.
Today? Goldman Sachs is forecasting just 3% annual returns from 2024 to 2034. It sounds bleak but not surprising: The S&P is trading at its highest price-to-earnings ratio since the dot-com boom. Vanguard isn’t far off, projecting around 5%.
In fact, nearly everything feels priced near all-time highs — equities, gold, crypto, you name it.
That’s why billionaires have long carved out a slice of their portfolios in an asset class with low correlation to the market and strong rebound potential: post-war and contemporary art.
It may sound surprising, but more than 70,000 investors have followed suit since 2019 — through Masterworks. Now you can own fractional shares of works by Banksy, Basquiat, Picasso and more.
Masterworks has sold 25 artworks so far, yielding net annualized returns like 14.6%, 17.6% and 17.8%.
Masterworks’ most recent sale highlights something else — faster exits beyond the more typical medium-hold period. Just 17 days after buying an Elizabeth Peyton painting for $1.16 million, it sold for $1.5 million — netting a 22.9% return for investors quick enough to buy in.
Moneywise readers can get priority access to diversify with art: Skip the waitlist here.
Note that past performance is not indicative of future returns. Investing involves risk. See important Regulation A disclosures at Masterworks.com/cd
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Financial Post (1); Bloomberg (2); Goldman Sachs (3); Fortune (4); CNBC (5), (8), (9), (11), (12); Current Market Valuation (6); Berkshire Hathaway (7); Seeking Alpha (10)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
