Warren Buffett Is Leaving Investors With a Clear Warning Before He Retires in January. Here's What Investors Can Do Heading Into 2026. | The Motley Fool

Warren Buffett surprised Berkshire Hathaway ( BRK.A 0.60%) ( BRK.B 0.61%) shareholders in May when he announced his retirement as CEO, effective at the end of the year. While Greg Abel has long been the presumed successor to Buffett as CEO of the conglomerate, the timing of the transition had been up in the air for years. Buffett's comments during the May shareholder meeting and his actions since suggest he's not going to change anything about how he runs Berkshire up until his retirement. That includes the company's massive marketable equity portfolio, which is currently valued at over $300 billion. But as he heads into retirement, Buffett is leaving investors with a clear warning about the stock market and exemplifying what investors should consider going into 2026. Image source: The Motley Fool. The $184 billion warning to investors Buffett has diligently built a massive portfolio of stocks within Berkshire Hathaway, leveraging float from the insurance business he acquired for the conglomerate shortly after taking over as CEO in 1965. Today, the stocks in the portfolio are worth about $315 billion. But they would be worth well over $500 billion if Buffett hadn't sold so much stock over the last three years. In fact, Buffett has been a net seller of stocks for Berkshire Hathaway in each of the last 12 quarters, amounting to nearly $184 billion in net sales over the last three years. NYSE: BRK.B Key Data Points He's sold some of the portfolio's biggest positions. For example, he slashed Berkshire's Apple ( AAPL 0.19%) stake by 73%; disposed of 44% of its Bank of America ( BAC 0.14%) position; and sold off 26% of the company's Chevron shares. Dozens of stocks have been culled entirely from the portfolio. Meanwhile, additions to the portfolio have been relatively small. Most investments involved adding a few hundred million dollars to existing positions. The biggest new positions are Chubb , Alphabet , and Sirius XM . The company also increased its stake in Occidental Petroleum by 36%. There's a clear reason for the giant discrepancy between the amounts bought and sold in the portfolio. Valuations in the market have climbed considerably higher over the last few years, particularly among the large-cap stocks held in Berkshire's portfolio. Apple, for example, now trades at 33 times forward earnings , a level it has consistently traded at since mid-2024 when Buffett stepped up his sales of the stock. Buffett originally purchased the stock when it traded at a price closer to 10 times forward earnings. Likewise, Bank of America's price-to-tangible book value ratio is approaching 2, a valuation it's rarely traded at since the Great Financial Crisis. NYSE: BAC Key Data Points Meanwhile, the entire S&P 500 has seen its valuations rise, with the index trading at roughly 22 times forward earnings expectations, a level rarely seen since the turn of the century. The CAPE ratio touched 40 for the second time in history. And Buffett's favorite valuation measure, the total market cap as a...

Preview: ~500 words