Monish Prabrai, a renowned value investor influenced by Warren Buffett, suggests a critical assessment of the S&P 500's current valuation, which sits at a high P/E ratio of 28.6. He favors investing in Berkshire Hathaway, which appears more reasonably priced compared to the expensive S&P 500. Though high valuations could lead to muted returns, the article encourages investors to remain vigilant about corporate earnings and market risks, emphasizing that intelligent questioning of conventional investments like the S&P 500 is essential in today's market environment.
At today's valuations, Berkshire Hathaway stock looks like a far cheaper bet than the S&P 500.
Investors are right to question the S&P 500's rising P/E ratio.
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