--- title: "Buffett officially retires: His favorite market indicator reveals key signals in the current U.S. stock market" type: "News" locale: "en" url: "https://longbridge.com/en/news/271127193.md" description: "Warren Buffett will officially retire this Wednesday, handing over power to his successor Greg Abel. His investment career has been centered on value investing, emphasizing not to chase high prices. The Buffett Indicator (the ratio of total market capitalization of U.S. stocks to GDP) has currently reached a historic high of 221.4%, indicating that U.S. stocks may face a correction in early 2026" datetime: "2025-12-30T16:30:55.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/271127193.md) - [en](https://longbridge.com/en/news/271127193.md) - [zh-HK](https://longbridge.com/zh-HK/news/271127193.md) --- > Supported Languages: [简体中文](https://longbridge.com/zh-CN/news/271127193.md) | [繁體中文](https://longbridge.com/zh-HK/news/271127193.md) # Buffett officially retires: His favorite market indicator reveals key signals in the current U.S. stock market This legendary figure in the investment world is about to retire after achieving great success. Let's focus one last time on his favorite stock market indicator to interpret the current market mysteries. Warren Buffett, the 95-year-old CEO of Berkshire Hathaway (BRK-B), will officially hand over the reins to his designated successor, Greg Abel, this Wednesday. This formal transfer of power marks the conclusion of Buffett's legendary career. His investment journey has created countless classics: acquiring the major American railroad company Burlington Northern, forming a deep friendship with Microsoft co-founder Bill Gates, and leaving many concise and insightful quotes in his annual shareholder letters. Buffett's son, Howard Buffett, once told me in the 2024 Yahoo Finance podcast "Opening Bell: Chat Edition": "The corporate culture of Berkshire is actually very simple: do what you say, keep your promises, treat people with sincerity; calmly admit mistakes and take responsibility for your errors." Howard will succeed his father as the chairman of Berkshire. Throughout his journey, Buffett has consistently practiced the **value investing philosophy** taught by his mentor Benjamin Graham, with the core principle being to never chase investments at high prices. **Buffett Indicator: U.S. Stock Valuation Hits All-Time High** The calculation method for the 'Buffett Indicator' is: **Wilshire 5000 Index (representing the total market value of U.S. stocks) ÷ U.S. Annual Gross Domestic Product (GDP)**. In 2001, Buffett co-authored an article with Carol Loomis, a senior writer at Fortune magazine, which brought this indicator into the limelight. Buffett candidly stated in the article: "While this ratio has certain limitations in reflecting the overall market, it may still be the **best single indicator** for measuring market valuation levels at any given point in time." Driven by the AI boom, this indicator has currently risen to **historically unprecedented heights**, indicating that U.S. stocks are likely to experience a healthy correction in early 2026. Breaking down the specific data: According to valuation research platform GuruFocus, the current value of the Buffett Indicator is approximately **221.4%**, a significant increase of 22 percentage points since April 30. Looking back at GuruFocus's earliest statistical data from 1970, this indicator has never reached such a high level. **Driving Force Behind U.S. Stock Surge: AI Boom Fuels Optimistic Expectations** Boosted by optimistic expectations regarding the profit potential of AI-related companies and the technological empowerment of performance, the S&P 500 Index has risen nearly 17% this year. Analysts have rapidly raised corporate earnings forecasts, further supporting the rise of U.S. stocks. Buffett himself is betting on the future of AI, maintaining heavy investments in Apple and Amazon, and recently increasing his holdings in Alphabet (GOOGL), the parent company of Google. Regardless of the future direction of U.S. stocks, one thing is undeniable: Buffett's profound impact on the investment world. Dan Sheridan, CEO of Brooks Running, told me in the "Opening Bell" program this October: "I believe Warren Buffett is the **legendary figure (GOAT) in the field of capitalism**, bringing us countless guidance and wisdom over the decades." Berkshire acquired Brooks Running in 2006. Every year at the highly anticipated Berkshire Annual Shareholders Meeting, Brooks launches custom sneakers featuring the portraits of Buffett and his lifelong business partner Charlie Munger ### Related Stocks - [Berkshire Hathaway Inc. (BRK.B.US)](https://longbridge.com/en/quote/BRK.B.US.md) - [Berkshire Hathaway Inc. 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