" Did Buffett's Words Or Actions Serve To Forecast The Near Future
In an interesting coincidence, the Berkshire Hathaway Annual Meeting coincided with a lengthy Barron's piece laying out what professional investors think about the next couple of years. Its headline is that investment professionals are the most bearish they have been in 28 years. Only a handful of the professionals were bullish, although when asked for specific forecasts of various market measures, their consensus was far more modestly negative than their majority might imply. The polling covered two years, through the end of 2026, and most of the money managers polled seemed confident that after a correction in 2025, the market would be back on track and on the way to new highs by the end of 2026. The way to understand this, I think, is that it is just in the nature of mainstream money managers to hold quantitative predictions to a modest level.

Money managers are to some degree trapped by the fact that they must be fully invested or close to it at all times. If they take an extreme position and their prediction doesn't come to pass, they may be fired. The market normally goes up about 10% per year (at least as measured by the Ibbotson-Chen study) so they tilt in a positive direction and cluster in the center where they feel most of their peers will be. Buffett has none of these constraints. He is strictly a long-term value-oriented investor, and you must read between the lines of his words and actions to infer his views. Buffett rarely gives a market prediction as such. His implicit predictions come in terms of available stocks with deep value (usually occurring near the end of bear markets) and the absence of buyable stocks (usually near the end of bull markets).

Even the most straightforward "Buffett indicator" used in the markets is subject to misuse when markets are out of whack. A recent headline I have seen in several places says, "Warren Buffett's favorite indicator flashes buy signal." Nothing could be further from the truth. Buffett's rough measure of value is derived by comparing total market valuation to GDP. That number hit 200% last year but has now declined to a present market value of 188% of GDP. That was no buy signal. The indicator simply dropped by 6% from 100% overvalued to 94% overvalued. At the Meeting Buffett spoke to the problem of short-term anchors of price, saying, "What's happened in the last 100 days – the decline and recovery - is not significant and should be ignored." I said as much myself in this March 1 article entitled "Don't Buy The Dip, It's Just A Blip, And Head For The Hills If A Rally Fails." There's nothing more reassuring than hearing Buffett align with your thinking. Here's hoping he will continue speaking out from time to time, giving us clues and nudges as to what's on his mind."
seekingalpha.com - Buffett exit berkshire was selling meant to leave clean slate for greg abel