Buffett Warns of Speculation as S&P 500 Holds Near 7,580 Highs

Warren Buffett cautioned on June 2 that investors are behaving like gamblers amid elevated valuations, capping a week of warnings even as the S&P 500 trades near record levels around 7,580. The index has climbed more than 30% over the past year and 18% from its late-March low despite a CAPE ratio near 42 and trailing P/E of 27.5x. Consumer sentiment hit an all-time low of 44.8 in May while AAII surveys showed 42-44% of investors expecting declines, echoing earlier cautions about summer headwinds from rising energy prices and corporate caution. History shows extreme pessimism has often preceded 15-22% forward 12-month returns, though the current setup lacks direct precedent given already elevated prices and Berkshire Hathaway’s record $400 billion cash position.