Billionaire investor and head of Greenlight Capital, David Einhorn, wrote in his hedge fund's quarterly report that investors are driving the most expensive US stocks in decades higher. He suggested investors consider the fact that Buffett is cashing out from the bull market.

According to Greenlight Capital's letter, the valuation of the stock market has reached its highest level since the company was founded in 1996. Now may not be a good time to hold high stock exposures, Greenlight Capital referenced Buffett's selling of stocks to support this view.

Greenlight Capital said, "Although Buffett often points out that it is impossible to predict the market's timing, we have to admit that he is one of the best market forecasters we have ever seen."

This famous $Berkshire Hathaway-B (BRK.B.US)$ Company investors have been reducing their stock positions and choosing to hold cash off the market. As of mid-August, Buffett's cash reserves reached a record $189 billion, and he has since been profit-taking from successful stocks.

Greenlight Capital stated that this "Oracle of Omaha" has a talent for reducing risk exposure at the right times. For example, the letter mentioned how Buffett closed his fund before the market became too bubbly in the 1960s, and sold his holdings before the 1987 crash.

The letter stated, "It can be said that avoiding bear markets is one of the reasons for his excellent long-term returns, a point not fully appreciated by investors."

The company added that this does not imply that there is a bubble in the market.

However, the market does indeed have concerning issues, such as the rise in the PE ratio, and low dividend yields.

While other market observers have also noticed that market prices are too high, Green Capital states that the issue is not just about the 'overvaluation' of well-known technology stocks, even mature industrial stocks with cyclical and growth opportunities have PEs of 30 to 50 times.

Based on these concerns, Greenlight Capital has implemented a trading strategy, disclosing its low equity beta exposure. The fund reported a third-quarter ROI of 1.1%, which is lower compared to$S&P 500 Index (.SPX.US)$an increase of 5.9%.

Although the company expects its current performance to continue to lag behind the continuously rising US stocks, its focus is on gold and$Green Brick Partners (GRBK.US)$The investment is considered to be a significant winner this quarter.

Editor/Rocky