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The U.S. stock market has been on a wild ride in 2025, with a slow start followed by growing momentum that ultimately led to the S&P 500 hitting a new all-time high(1).
In fact, 2025 is so good for the market—despite the volatility in April’s tariffs and the Fed’s pessimism—that nearly every Wall Street firm predicts the market will maintain this momentum into 2026(2).
However, they did not count on the White House launching a war in the Middle East, resulting in increased instability.
Meanwhile, back home, a meter popularized by Warren Buffett is flashing red, and has been for some time.
The Buffett Indicator measures the total market capitalization of the U.S. stock market relative to gross domestic product, essentially measuring whether there is a potential bubble, similar to the bursting of the dot-com bubble in 1999 (3). Buffett is so confident in the metric that he once told Fortune magazine that it is “probably the best single indicator of the level of valuation at any given moment(4).”
Today, the Buffett Index is as high as 230%, exceeding the level of Internet companies (5). According to the indicator, this suggests that U.S. stocks are “significantly overvalued” relative to GDP.
Part of the indicator’s appeal is that it’s easy to use and understand – especially for investors keen on timing their purchases.
In his reflections on the dot-com bust in 2001, Buffett offered a simple guide: “If the percentage relationship falls into the 70% or 80% area, buying stocks could be very beneficial to you. If the ratio approaches 200% (as it did in 1999 and part of 2000), you are playing with fire(6).”
So if you’re worried about what to do, here’s a look at how Buffett and others reacted to the news, plus three potential ports in the storm.
Berkshire Hathaway, Buffett’s longtime CEO, has cooled its stance on U.S. stocks in response to rising stock market valuations.
Although Buffett stated in his 2024 shareholder letter that “Berkshire shareholders can rest assured that we will always have the majority of their funds invested in stocks(7)”, Berkshire was a net seller of stocks between 2024 and 2025, holding a huge cash pile of $381.7 billion as of September 2025(8).
The company has since taken a slightly more balanced approach, but it still had $373.3 billion in cash at the end of 2025, just 2.2% below last year’s high.
In short, the company is not buying U.S. stocks and is still hoarding cash.
Buffett isn’t the only one who thinks U.S. stocks look stretched. Federal Reserve Chairman Jerome Powell also warned in September 2025 that stocks were “significantly overvalued(9)”.
Recently, Leon Cooperman, chairman and CEO of Omega Family Office, warned that the U.S. stock market is dangerously overpriced and that a market correction is coming(10).
“The stock market is not discounting environmental uncertainty in an appropriate way,” Cooperman said of the Iran war and other global economic uncertainties.
Many experts have been warning over the past few weeks that the outcome of the war would be stagflation or recession, especially if global oil supplies were threatened in the long term.
“The market shouldn’t get to the level it sells to,” Cooperman noted. “Too expensive.”
Read more: I’m almost 50 and have no retirement savings. Is it too late to catch up?
Read more: Non-millionaires can now invest in this $1 billion private real estate fund, starting at just $10
If hoarding cash wasn’t enough of a warning, gold’s record performance in 2025 is another sign that wealthy people are bracing for stock market turmoil.
Gold and silver have long been classic hedges against inflation. Unlike fiat currencies, precious metals cannot be created at will by central banks. Because their value is not tied to any single country, currency or economy, investors often turn to them during times of market turmoil and geopolitical uncertainty.
Ray Dalio, founder of Bridgewater Associates, the world’s largest hedge fund, told CNBC earlier this year that people “generally don’t have a sufficient amount of gold in their portfolios(11).”
“Gold is a very effective diversifier when times get tough,” he added.
Although gold has experienced a correction recently, for some investors, this may stimulate bargain hunting.
If you’re looking for a way to invest in this inflation-hedge asset, opening a gold IRA with the help of Tor Metals is an option to build a retirement fund while also providing significant tax benefits.
A gold IRA allows investors to hold physical gold or gold-related assets in 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 hedge their retirement funds against economic uncertainty.
To learn more, you can get a free information guide with details on how to get up to $20,000 in free metal with qualifying purchases.
Like stocks, real estate has cycles, but it doesn’t rely on a booming market to generate returns.
Even during an economic downturn, high-quality, essential real estate can continue to generate passive income through rentals. In other words, you don’t have to wait for prices to rise to see returns – the assets themselves can work for you.
Buffett often points to real estate as a prime example of a productive, income-producing asset. In 2022, he said he would “write you a check(12)” if you offered him “1% of the nation’s apartments” for $25 billion.
But you don’t have to be Warren Buffett or even take out a 30-year fixed-rate mortgage to invest in real estate.
For many people, investing in real estate means buying a property – but most people don’t have that kind of spare cash.
However, you can get into this market right now by investing in shares of a vacation home or rental property with just $100 through Arrived.
Backed by world-class investors including Jeff Bezos, Arrived allows you to invest in shares of vacation and rental properties and earn a passive income stream without the additional work of being a landlord of your own rental property.
To get started, simply browse their selection of pre-vetted properties, carefully selected based on their potential appreciation and income-generating capabilities. Once you select a property, you can start investing immediately, potentially earning quarterly dividends.
If you are interested in multifamily rentals, you may also consider investing in Lightstone DIRECT, a new investment platform from Lightstone Group. Lightstone Group is one of the largest privately held real estate companies in the United States, with more than 25,000 multifamily units in its portfolio.
Because they eliminate intermediaries (brokers and crowdfunding middlemen), accredited investors investing at least $100,000 have direct access to institutional-quality multifamily opportunities. This simplified model helps reduce expenses while increasing transparency and control.
Through Lightstone DIRECT, you invest in single-asset multifamily transactions with a true partner, Lightstone, who invests a minimum of 20% of its own capital in each product. All investment opportunities at Lightstone undergo a rigorous, multi-stage review before being approved by Lightstone 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 evaluate your investment opportunity. From here, all you have to do is verify your details to start investing.
Founded in 1986, Lightstone has a proven track record of delivering strong risk-adjusted returns across market cycles, with a historical net internal rate of return of 27.6% on realized investments since 2004 and a historical net equity multiple of 2.54x. All told, Lightstone manages $12 billion in assets — including industrial and commercial real estate.
So even if multifamily rentals don’t interest you, Lightstone may still serve you well as an investment vehicle in other real estate verticals.
Start investing with Lightstone DIRECT today with experienced professionals.
Stock market volatility is the number one reason any retirement portfolio needs diversification, especially for those approaching retirement. In your sixties, a stock market drop could cost you your last few decades of basic income.
In 1999, the S&P 500 index peaked and it took 14 long years to fully recover.
today? Goldman Sachs predicts annual returns from 2024 to 2034 of just 3%. That sounds bleak, but it’s not surprising: The S&P’s price-to-earnings ratio is at its highest level since the dot-com boom. Vanguard’s share isn’t far behind either, expected to be around 5%.
In fact, prices for just about everything are near all-time highs — stocks, gold, cryptocurrencies, you name it.
That’s why billionaires have long carved out a portion of their portfolios in asset classes with low correlation to the market and strong rebound potential: postwar and contemporary art.
This may sound surprising, but since 2019, more than 70,000 investors have followed suit through Masterworks. Now you can own a stake in the work of Banksy, Basquiat, Picasso and more.
To date, Masterworks has sold 25 pieces of art, with annualized net returns of 14.6%, 17.6% and 17.8%.
Masterworks’ recent sale highlights another feature – faster exits outside of the more typical medium-term holding period. Just 17 days after purchasing the Elizabeth Peyton painting for $1.16 million, the painting sold for $1.5 million — a 22.9% return for investors who bought quickly.
Moneywise readers get priority access to Arts Diversity: Skip the waitlist here.
Please note that past performance is not indicative of future returns. Investing involves risks. Please 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); Searching Alpha (10)
This article provides information only and should not be considered advice. It is provided without any warranty of any kind.