Buffett says market speculation is making bargains harder to find
The Berkshire Hathaway chair told CNBC that speculative trading has made value investing more difficult as stocks sit near record highs.
By Dev Ramirez · Crypto Correspondent
· 3 min read
Warren Buffett is warning that a more speculative stock market is making it harder to find attractively priced companies. For everyday investors, the point is direct: when short-term trading dominates, prices can move less on business fundamentals and more on appetite for risk.
In an interview with CNBC’s Becky Quick, the Berkshire Hathaway chairman said, “It’s tough to find values when everybody is preferring gambling.” Buffett, 95, has long been associated with value investing, a strategy that looks for businesses trading below what an investor believes they are worth based on earnings power, assets and long-term prospects.
Buffett’s comments come as the stock market has climbed to all-time highs this year, according to CNBC. The rally has continued despite investor concerns that included an energy shock tied to the continuing war with Iran.
CNBC reported that some market skeptics see excessive speculation in stocks linked to the artificial intelligence buildout. Those concerns have also centered on trading products that can magnify short-term moves, including options and leveraged exchange-traded funds.
An option is a contract that gives a trader the right to buy or sell an asset at a set price by a certain date. A one-day option expires the same day it is traded, which can make it a vehicle for very short-term bets. A leveraged exchange-traded fund, or ETF, is a fund designed to deliver a multiple of an index’s daily move, which can increase both gains and losses.
Buffett made a similar criticism earlier this year at Berkshire Hathaway’s annual meeting in May, according to CNBC. He described the stock market as “a church with a casino attached” and singled out the rise of one-day options trading as “gambling.”
Retail traders have also become a larger force in the market, CNBC reported. The network said individual investors have been buying shares of memory chipmaker Micron and recent IPO SpaceX.
Buffett framed the current market as part of a cycle in which true bargains can appear in clusters, then become scarce for long stretches. “There are times when opportunities are just thrown at you so fast you can’t, you know, it’s unbelievable,” he told CNBC. “And then there’s other times when you’re very, very lucky if you find one thing in a couple of years.”
He added that the harder environment should be the more common one for investors seeking value. Buffett also argued that markets and businesses have more incentive to serve people who want to speculate than people trying to invest with patience.
“But since humans love to gamble so much, there’s more money in actually cultivating gamblers than there are cultivating investors,” Buffett told CNBC.
For investors following Berkshire, Buffett’s comments reinforce a familiar message: he favors patience, discipline and a focus on business value over fast trading. His latest warning also lands at a moment when record stock prices, AI enthusiasm and complex trading products are all shaping how risk is priced across the market.
This story draws on original reporting from CNBC.
