There's something worth paying attention to in how the market's biggest investors are positioned right now. Warren Buffett just retired in December, but his final moves at Berkshire Hathaway are sending a pretty clear signal about where valuations stand.

Here's what happened: Over the past 13 quarters, Berkshire has been a net seller of stocks to the tune of $187 billion. That's significant because it represents a major shift from Buffett's historical playbook. Back in 2018, he said it was hard to think of months when they weren't net buyers. Now the opposite is happening.

You might argue that Berkshire is simply too large to deploy capital efficiently anymore. The company's tangible book value has more than doubled to around $580 billion, and they're sitting on over $300 billion in cash. So maybe there just aren't enough opportunities that move the needle. Fair point. But here's the thing - even with all that dry powder, they're still selling more than they're buying quarter after quarter. They've taken positions in companies like Alphabet and UnitedHealth Group, yet they're still net sellers overall. That pattern suggests something specific: Warren Buffett and his team believe the market is simply too expensive right now.

The numbers back this up. The S&P 500's cyclically adjusted price-to-earnings ratio hit 39.8 in February. Outside of the last few months, you have to go all the way back to the dot-com crash in 2000 to see valuations this stretched. This has only happened 26 times since 1957 - that's 26 months out of 829.

Here's where it gets interesting from a historical perspective. Every time the market's CAPE ratio has exceeded 39, the subsequent returns have been pretty grim. Over the next six months: flat. One year out: down 4%. Two years: down 20%. Three years: down 30% on average. If history repeats, the S&P 500 could be significantly lower by 2029.

Now, there's always the caveat that past performance doesn't guarantee future results. Maybe artificial intelligence will drive earnings growth so fast that valuations compress while prices stay elevated. Maybe this time really is different. But Warren Buffett's $187 billion warning suggests he's not betting on it.

For investors, the takeaway is straightforward. Focus on what you'd be comfortable holding if the market dropped sharply. Look for stocks trading at reasonable valuations where earnings are likely to be materially higher in five years. Avoid the temptation to chase momentum in an expensive market. Buffett's been signaling this through his actions for over a year now. Whether you listen is up to you.