The Oracle of Omaha (Warren Buffett) has seen his Buffett Indicator recently fall to last September's low. Is this a buying signal? Berkshire Hathaway will hold its annual shareholder meeting in Omaha this weekend, and many predict that this could be the last time 94-year-old Buffett fully participates in the meeting. Investors will closely watch whether Buffett has started using the company's record cash reserves to buy cheap assets in the market.

The Buffett Indicator has recently declined. Will it repeat the big rebound after last year's yen arbitrage liquidation?

In a December 2001 interview with Forbes, Buffett mentioned that the ratio of total market capitalization to GDP could serve as a gauge to determine whether the overall stock market is overvalued or undervalued, thus it is commonly referred to as the Buffett Indicator. This indicator can measure whether the current financial market reasonably reflects fundamentals. Buffett's theoretical index indicates that 75% to 90% is a reasonable range, while over 120% suggests that the stock market is overvalued. According to charts from Financial M Square, the Buffett Indicator has remained at elevated levels since 2016, hovering above 200 from late last year to early this year, but fell to 165 in early April. Its current value stands at 189, approximately equivalent to the level following last year's yen arbitrage liquidation, which temporarily but sharply depressed the indicator, after which the stock market saw a significant rebound.

This year, various valuation indicators have taken on greater significance as investors attempt to determine whether the sell-off triggered by tariffs has made stock prices cheaper relative to their fundamentals. With the S&P 500 rebounding 12% from its April low, these calculations have become more complex, as traders begin to consider whether to bet on further gains for the index or strengthen hedges and bet on a pullback. The index is still down nearly 9% from its historical peak in February.

Is Buffett in the Berkshire shareholder meeting?

Berkshire Hathaway, founded by the Oracle of Omaha, will hold its annual shareholder meeting in Omaha this weekend. Many predict that this could be the last time 94-year-old Buffett fully participates in the meeting. In the company's annual letter to shareholders earlier this year, he stated, "A successor will soon take over as CEO, likely Greg Abel."

Investors are eagerly awaiting Berkshire's annual shareholder meeting on Saturday, partly to see if Buffett has utilized the company's cash reserves (the latest report shows that the company's cash reserves have reached a record $321 billion) to buy cheap assets in the market.

Scott Colyer, CEO of Advisors Asset Management, stated that Buffett has "always been a long-term investor."

More importantly, we want to hear his views on the economy and whether the lower valuations allow him to reinvest the cash he deployed previously when he sold stocks.

This article, The Buffett Indicator has recently declined, and the Berkshire shareholder meeting will reveal whether Buffett has bought on dips, first appeared in Chain News ABMedia.