Does Warren Buffett Know Something That Wall Street Doesn't? The Answer Is as Clear as Day.

Keith Speights, The Motley Fool

Tue, Mar 11, 2025, 1:51 AM 5 min read

Warren Buffett pointed retired a cardinal quality betwixt himself and Wall Street successful his latest missive to shareholders of Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B). He noted that helium doesn't usage net earlier interest, taxes, depreciation, and amortization (EBITDA), referring to the fiscal metric arsenic "a flawed favourite of Wall Street."

This divergent instrumentality connected EBITDA reflects conscionable the extremity of the iceberg of what could beryllium described arsenic diametrically antithetic perspectives. Does Buffett cognize thing Wall Street doesn't? The reply is arsenic wide arsenic day.

Until recently, Wall Street seemed downright giddy. The S&P 500 soared 28.5% betwixt Jan. 1, 2024 and Feb. 18, 2025. However, the scale has since fallen 7% from its peak.

Why? Probably the biggest crushed is that investors are disquieted astir the antagonistic interaction of the Trump administration's projected tariffs.

The absorbing happening astir each of this is that President Donald Trump is doing (or astatine slightest taking archetypal steps to do) precisely what helium said helium would bash erstwhile helium ran for a 2nd statesmanlike term. Trump promised tariffs; present he's moving to instrumentality them.

However, immoderate hint of a reprieve from the levying of tariffs brings a suspiration of alleviation from Wall Street. You mightiness accidental the marketplace is successful a "hope/worry" cycle.

Meanwhile, astir analysts inactive urge buying the stocks that person led the bull marketplace implicit the past mates of years oregon so. For example, 58 of the 63 analysts surveyed by LSEG successful March presumption Nvidia arsenic a bargain oregon a beardown buy, with the outliers recommending holding the stock.

This optimism isn't constricted to Nvidia. However, Wall Street remains mostly affirmative contempt a banal marketplace that's valued astatine historically precocious levels. Just look astatine the Shiller S&P 500 CAPE ratio. Despite a diminution implicit the past fewer weeks, the valuation metric is inactive adjacent its second-highest level ever.

Buffett hasn't been astir arsenic bullish arsenic Wall Street. That's evident from his actions arsenic the banal marketplace soared.

For 1 thing, the multibillionaire capitalist has been a nett seller of stocks for 9 consecutive quarters. Sure, the "Oracle of Omaha" has continued to bargain a fewer stocks. However, helium isn't uncovering overmuch to his liking these days.

Buffett didn't adjacent authorize banal buybacks of Berkshire Hathaway successful the 4th fourth of 2024. That's striking, considering that Berkshire has repurchased astatine slightest immoderate of its shares successful each erstwhile 4th implicit the past 5 years.