The S&P 500 gained 24% in 2023, 23% in 2024 and about 16% in 2025, with much of the rally driven by AI enthusiasm concentrated in a small group of tech stocks. The Shiller CAPE ratio is around 41 versus a historical average near 17, a level reached only in a few periods, most notably the dot-com bubble. Warren Buffett favored a low-cost S&P 500 index fund over trying to time corrections, and Berkshire Hathaway bought 43,000 shares of the Vanguard S&P 500 ETF (VOO) in late 2019, holding them for roughly five years. With a 0.03% expense ratio and exposure to hundreds of businesses, the article argues VOO remains a compelling long-term holding, while the S&P 500 has returned about 10% annualized from 1928 to 2025.
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