"There's Never Been This Much 'Gambling'"… See 'This Indicator' for Stock Market Drops?

Warren Buffett, chairman of Berkshire Hathaway, recently warned that the excessive risk-appetite phenomenon in the U.S. stock market "is becoming gambling rather than investing."

According to the U.S. investment specialized media outlet The Motley Fool, Chairman Buffett pointed out the speculative frenzy targeting short-term gains at this year's Berkshire Hathaway annual shareholder meeting, saying, "There has never been a time when people fell into a gambling mentality to this extent."

He compared the stock market to "a church with a casino attached."

"Long-term value investing corresponds to the church, while ultra-short-term trading and speculation correspond to the casino," he explained.

In particular, he expressed concern that short-term derivative transactions, such as 0DTE options which are options expiring on the same day, are becoming excessively active.

Indicators showing market overheating are also following one after another, just as Buffett said.

The "Buffett Indicator," referenced by investors around the world, compares the total market capitalization of the U.S. stock market to Gross Domestic Product, or GDP, and has currently risen to an all-time high, leading to assessments that market value is excessively high compared to the scale of the economy.

The cyclically adjusted price-to-earnings ratio index also maintains a high level and is being compared to the past dot-com bubble era.

Despite these concerns from Buffett, some analyses suggest that high stock valuation does not immediately mean a stock market decline.

Earlier early this morning, the New York stock market closed weak as news broke that Iran is pushing for a bill to ban U.S. and Israeli ships from navigating the Strait of Hormuz.

Reported by Kim Jiuk | Video by Seo Byeong-wook | Graphics by Yang Hye-min | Produced by SBS Digital News
※ Please note: This article was translated by AI and may contain errors.