STOCKS | Buffett Warns Some Investors Are Just Gambling

Warren Buffett warned that some investors are treating the stock market like gambling. According to Sina Finance, he said the market resembles a church with a casino attached, where the church represents steady long-term investing and the casino represents short-term speculative risk-taking. Buffett made the remarks during an interview at Berkshire Hathaway's annual shareholder meeting earlier this year, as markets were trading near record highs. He said some of the riskiest investments are those whose dangers investors do not even recognize, and noted that overpriced stocks can surge in the short term before eventually returning to more reasonable valuations. He also pointed to the S&P 500 Shiller CAPE Ratio as a warning signal. According to Sina Finance, the ratio's long-term average since 1871 is about 17 times, it reached a peak of 44 times before the 1999 internet bubble burst, and it has now moved above 40 times for only the second time in history. Buffett said this does not necessarily mean the market is in a bubble, adding that higher valuations do not automatically mean stocks are overvalued if artificial intelligence can drive real economic growth. He said investors face the risk of holding expensive stocks alongside reasonably valued companies, and that choosing the wrong stock could lead to a sharp portfolio decline in the next bear market.