Heed Warren Buffett's Advice: The Time to Be Fearful When Others Are Greedy Has Officially Arrived
2026-10-12 09:06
•Sean Williams •The Motley Fool
•• •••••••••••••••••• Axe Cap view
Time to Get Cautious as Buffett's Indicator Hits New Highs
Sky-high valuations signal it’s prudent to dial back risk on the JSE and watch the rand closely.
Warren Buffett’s favorite market measure, the Buffett Indicator, just smashed previous records, flashing a red light on stock valuations globally — they are stretched to levels above even the Dot-Com bubble. Buffett himself moved heavily to cash before retiring, a classic sign that caution is warranted. While this is a US-focused signal, the South African market rarely operates in a vacuum. Our market’s heavyweight Naspers and Prosus have been bid up on global tech enthusiasm, and with the S&P 500 top-heavy, those premiums could come under pressure. A broadly stronger US dollar versus the rand (USD/ZAR) seems probable as capital seeks safer shores, which will add further headwinds to our export-sensitive sectors and inflation dynamics. I’d avoid chasing expensive growth names on the JSE right now. Instead, focus on more resilient financials like Standard Bank or Sanlam, which have better earnings visibility and operate somewhat independently of global tech volatility. Of course, this view could prove wrong if US tech earnings surprise positively or global liquidity conditions loosen, boosting risk appetite again. this is just our opinion and not financial advice
Trim positions in Naspers and Prosus, avoid new growth bets for now, and increase exposure to South African banks like Standard Bank and Sanlam. Keep an eye on the USD/ZAR as a risk barometer.
- Naspers
- Prosus
- Standard Bank
- Sanlam
- USD/ZAR
- US tech earnings rebound easing global risk aversion
- Unexpected loosening of global monetary policy boosting liquidity
7/10
Warren Buffett retired as Berkshire Hathaway CEO on December 31, 2025, after outperforming the S&P 500 by over 6,000,000%. His preferred valuation metric, the Buffett Indicator, has reached 240%—the highest in history, surpassing the Dot-Com Bubble and 2008 Financial Crisis. Buffett was a net seller of stocks for 13 consecutive quarters before retirement, accumulating a large cash position. The article argues that current stock valuations are extremely expensive, and investors should heed Buffett's famous advice to be fearful when others are greedy.
Our take is based on reporting first published by The Motley Fool.