# S&P 500 up 31% YoY as valuations hit historic highs, Berkshire lags

**Published:** 2026-06-17T12:45:07.614Z  
**Topic:** S P 500  
**Sentiment:** neutral  
**Publisher:** TrendWatcher — https://www.trendwatcher.in/article/20beb21d-e4d6-428a-9ebe-2257219f6b57

S&P 500 climbs 31% in 12 months, Shiller CAPE near 40 and Buffett indicator at 228%; Berkshire trails by 16.3 pts. See why valuations matter.

The S&P 500 has risen 31% over the past 12 months, pushing the Shiller CAPE ratio to a near‑historic 40 and the Buffett indicator to roughly 228% of GDP, while Berkshire Hathaway’s B‑share performance lags the index by 16.3 percentage points year‑to‑date【1】【2】.

| At a glance | |
|---|---|
| S&P 500 YTD gain | +31% |
| Shiller CAPE ratio | ~40 (second‑highest ever) |
| Buffett indicator | ~228% of U.S. GDP |
| Berkshire B‑share lag | –16.3 pts vs. S&P 500 YTD |

## Market rally and valuation alarms  
The broad market’s 31% gain this year comes despite “surging inflation and an ongoing war in the Middle East,” and has been driven largely by tech stocks that have lifted the index 35% in April‑May alone【1】【2】. This rally has lifted the Shiller CAPE ratio—an inflation‑adjusted 10‑year earnings multiple—to about 40, the second‑highest level on record after the pre‑Great‑Depression 1920s peak【1】. The Buffett indicator, which compares total U.S. stock market value to GDP, now sits near 228%, a level Buffett himself warned signals “playing with fire” when it approaches 200%【1】. Both metrics suggest the market may be overvalued relative to historical norms.

## Berkshire’s divergent path  
Berkshire Hathaway’s B‑shares have barely moved in May, leaving the conglomerate 16.3 percentage points behind the S&P 500 YTD—the widest gap this year【2】. After a modest 1.8‑point outperformance at the end of March, the S&P 500 surged while Berkshire fell almost 11% in April‑May, reflecting the firm’s minimal exposure to AI‑driven tech that is propelling the broader index【2】. Berkshire’s cash pile sits near $400 billion, and its only notable AI exposure is a recent tripling of its Alphabet stake to about $22 billion, now its fifth‑largest holding【2】.

## Investor sentiment and the road ahead  
A recent AAII survey shows 67% of investors feel optimistic or neutral about the next six months, up from 57% a month earlier【1】. Yet the same article warns that elevated valuation metrics have persisted for months, implying a pull‑back may be inevitable even if the market continues to climb in the short term【1】. The contrast between the market’s strong performance and Berkshire’s underperformance underscores a broader debate: whether the AI‑heavy, high‑valuation environment will sustain or reverse.

## What to watch  
- Upcoming U.S. CPI release (date TBD) – a key gauge of inflation that could influence the S&P 500’s momentum.  
- Federal Reserve policy meeting (scheduled for July) – any shift in rate expectations may affect equity valuations and the Buffett indicator.  
- Berkshire’s next quarterly filing – changes in AI exposure or cash deployment could narrow or widen its performance gap with the S&P 500.

The S&P 500’s robust gains have pushed valuation gauges to levels last seen before major market corrections, while Berkshire’s lag highlights a potential hedge against an AI‑centric rally. Whether the market’s upward trajectory can persist amid such historic overvaluation remains an open question.

## Sources
1. The Motley Fool — [Is This S&P 500 Bull Market Ending Soon? History Has Unfortunate News for Investors.](https://www.fool.com/investing/2026/05/13/is-this-sp-500-bull-market-ending-soon-history-has/)
2. CNBC — [Berkshire trails red-hot S&P 500 by biggest margin so far this year](https://www.cnbc.com/2026/05/30/berkshire-trails-red-hot-sp-500-by-biggest-margin-so-far-this-year.html)

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Cite as: TrendWatcher, "S&P 500 up 31% YoY as valuations hit historic highs, Berkshire lags", https://www.trendwatcher.in/article/20beb21d-e4d6-428a-9ebe-2257219f6b57