Recently, Berkshire Hathaway held its 2026 annual shareholders meeting, where the "Oracle of Omaha," Warren Buffett, attended as a spectator for the first time. In an interview with media, Buffett stated that the current U.S. stock market resembles a "church with a casino," where speculative gambling has reached its peak.

In my view, Buffett's assessment is not an emotional lament but rather a revelation of the underlying risks in the U.S. stock market, which has been operating at elevated levels for an extended period with excessively speculative sentiment.

First, one observable phenomenon is the current popularity of "zero-day options" in the U.S. stock market. These ultra-short-term trading instruments are option contracts that expire and become worthless on the same day, allowing traders to speculate on short-term price movements for rapid gains. Their high leverage and high-risk characteristics have attracted significant interest from U.S. stock investors. However, Buffett explicitly stated in the interview that such trading is not investment but outright gambling. Indeed, these products, which disregard fundamental analysis of companies and focus solely on intraday price fluctuations, are a direct reflection of the intense speculative atmosphere in the U.S. stock market.

This market structure, dominated by speculation, harbors multiple risks. For example, the high leverage associated with short-term options like "zero-day options" could trigger cascading liquidations during periods of heightened market volatility, thereby amplifying price swings and increasing the fragility of financial markets. Additionally, the market's pricing mechanism may become distorted, as short-term trading preferences and herd behavior—such as chasing rallies and selling during declines—weaken the market's ability to discover true value, exacerbating financial instability.

Second, the U.S. stock market has been in an overvalued state for a considerable time. Although indices have repeatedly hit record highs, this performance heavily relies on the elevated valuations of technology stocks. The influence of a few mega-cap technology companies on overall index valuations continues to grow, particularly during earnings seasons.

Third, the uncertainty surrounding the Federal Reserve's monetary policy has heightened risks in the U.S. stock market. Currently, divisions within the Federal Reserve's voting structure have become more pronounced, deepening the conflict between its dual objectives of "fighting inflation" and "supporting growth." At the end of April, the Federal Reserve held its monetary policy meeting, announcing its third consecutive decision to keep interest rates unchanged this year. In its statement, the Fed explicitly noted that inflation remains "elevated," signaling concerns about its persistence. The U.S. stock market relies on expectations of monetary easing to support valuations. However, with the Federal Reserve delaying interest rate cuts and having limited room to maneuver, the outlook for the market remains clouded.

It is worth noting that while Buffett is using his words to "pour cold water" on the U.S. stock market, Berkshire Hathaway is also backing its judgment with tangible actions. As of March 31, Berkshire's cash and cash equivalents surged to a staggering $397.38 billion, setting a new all-time high. This record cash reserve, approaching $400 billion, sends a strong signal in Berkshire's first earnings report in the "post-Buffett" era: the current U.S. stock market may lack sufficiently attractive investment opportunities.

In my view, Buffett's warning serves as a cautionary tale for all types of investors: abandoning a gambler's mentality, avoiding high-leverage short-term speculation, and focusing on the long-term fundamentals of companies are the core principles for navigating market cycles and mitigating risks.