To this point, Buffett's consistent net selling activity since Oct. 1, 2022, has served as his big warning to Wall Street. It's called into question the stock market's historically pricey valuation, as well as reinforced something Berkshire's chief noted in his latest annual letter to shareholders: "Often, nothing looks compelling."

But there's now an even bigger warning for Wall Street, courtesy of the stock market's most-revered money manager.

The Oracle of Omaha's biggest warning to Wall Street is a true eye-opener

Despite being a net seller of stocks for the previous 30 months, Warren Buffett is unwavering in his belief that investors shouldn't bet against the U.S. economy. Though Berkshire's CEO is fully aware that economic downturns and stock market corrections are inevitable, he astutely understands that recessions and market downturns are short-lived. Wagering on U.S. economic growth and stock market upside has been the smart move for long-term investors.

However, the one aspect of Buffett's investment philosophy that supersedes his long-term optimism for America and stocks is his unending desire to get a good deal.

Warren Buffett is a value investor who's demonstrated an unwillingness to bend when even beloved companies are no longer attractively priced. Until recently, being a net seller of stocks in Berkshire's investment portfolio had demonstrated this desire to get a good deal -- but there's now an even bigger warning.

Between July 2018 and June 2024, Buffett green-lit the repurchase of nearly $78 billion worth of Berkshire Hathaway stock. Buying back his company's stock for 24 consecutive quarters offered a way for Berkshire's chief to reward long-term investors and ultimately make his company's stock more fundamentally attractive by providing a boost to earnings per share.

But for three consecutive quarters (July 1, 2024 – March 31, 2025), Buffett hasn't spent a dime buying back shares of his own company. The reason is almost certainly due to Berkshire Hathaway stock trading at a 60% to 80% premium to its book value. Between mid-2018 and mid-2024, this premium had hovered between 30% and 60% above book.

There's no greater warning to Wall Street than Warren Buffett firmly depressing the brakes on repurchasing shares of his favorite stock -- i.e., his own company.

Stocks are expensive -- but Buffett's patience has historically paid off

If the Oracle of Omaha is willing to put his foot down and not purchase shares of his own company, it demonstrates just how pricey stocks are at the moment.

In mid-February, when the benchmark S&P 500 hit its record-closing high, the so-called "Buffett indicator" did, as well. The Buffett indicator divides the aggregate value of all U.S. publicly traded companies by U.S. gross domestic product (GDP).

When back-tested to the start of 1970, the Buffett indicator has averaged a reading of 85%. In other words, the cumulative value of all public stocks has equated to roughly 85% of U.S. GDP. In mid-February, the Buffett indicator hit its all-time high of 205.5%!

The S&P 500's Shiller price-to-earnings (P/E) ratio tells a similar story. This valuation tool, which is also known as the cyclically adjusted P/E Ratio (CAPE Ratio), hit a multiple of nearly 39 in December 2024. For context, the Shiller P/E has averaged a multiple of a little over 17 when back-tested 154 years.

Both of these tools point to value being virtually nonexistent on Wall Street at the moment.

The silver lining here is that Warren Buffett's patience has proved quite profitable over the years. Being disciplined enough to sit on his proverbial hands and wait for valuations to come into his wheelhouse is a trait that's made Berkshire's chief a phenomenal investor.

For example, one of the few stocks Buffett has been loading up on is satellite radio operator and legal monopoly Sirius XM Holdings (NASDAQ: SIRI) . Berkshire currently owns a greater than 35% stake in the company.

Whereas the Shiller P/E is at its third-priciest valuation during a continuous bull market in a period spanning more than 150 years, Sirius XM is valued around a forward P/E ratio of 7, which is a stone's throw from its historic low as a public company of 31 years. Being the lone satellite radio operator, and generating the bulk of its revenue from subscriptions, as opposed to advertising like traditional radio companies, places Sirius XM stock in favorable risk-versus-reward scenario.

Despite Warren Buffett's biggest warning to Wall Street yet, history shows that Berkshire's shareholders, and long-term investors as a whole, are still sitting pretty.

Should you invest $1,000 in Berkshire Hathaway right now?

Before you buy stock in Berkshire Hathaway, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Berkshire Hathaway wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $651,761 !* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $826,263 !*

Now, it’s worth noting Stock Advisor ’s total average return is 978% — a market-crushing outperformance compared to 170% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor .

See the 10 stocks »

*Stock Advisor returns as of May 19, 2025

Bank of America is an advertising partner of Motley Fool Money. Sean Williams has positions in Bank of America and Sirius XM. The Motley Fool has positions in and recommends Apple, Bank of America, and Berkshire Hathaway. The Motley Fool has a disclosure policy .

This Is Warren Buffett's Biggest Warning to Wall Street Yet was originally published by The Motley Fool