Warren Buffett, the legendary investor and chairman of Berkshire Hathaway, has long advised investors to stay calm during market volatility. In the face of recent stock market declines triggered by President Donald Trump’s announcement of tariffs on U.S. trading partners, Buffett’s wisdom rings particularly true. Buffett famously said, “There is simply no telling how far stocks can fall in a short period.” He suggests that during major declines, investors should heed these lines from Rudyard Kipling’s 1895 poem “If—”:
“If you can keep your head when all about you
Are losing theirs and blaming it on you,
If you can trust yourself when all men doubt you…”
You may want to look up this poem and memorize it. Keeping a cool head during market downturns pays off in the long run.
While corrections in the stock market are regular occurrences, with an average intra-year drawdown of 14% since 1980, bear markets are less common. However, investors often don’t know if declines will worsen until they do. Buffett’s advice to individual investors remains consistent: stick to your long-term plans and continue investing.
He views downturns as “extraordinary opportunities” because, historically, the market resumes its upward trajectory relatively quickly. Since 1928, the average bear market has lasted less than 10 months. You can buy stocks at discounted prices by continuing to invest consistently as the market declines.
Calm investing amid market downturns
As long as you maintain a well-diversified investment approach, you’ll get better deals as stock prices fall. Buffett’s advice about taking advantage of bargain-priced investments is encapsulated in another of his quotes: “Big opportunities come infrequently.
When it’s raining gold, reach for a bucket, not a thimble.”
Patience and consistency in investing are crucial during market downturns. Stick to your strategy; in the long run, you’ll likely see substantial benefits. Investors looking to align their strategy with Warren Buffett’s approach should consider stocks like Amazon, Apple, and Domino’s Pizza.
These companies demonstrate strong brand power and resilience and promise growth and innovation for years to come. Amazon dominates both e-commerce and cloud computing, with around 40% of the U.S. e-commerce market share and a growing emphasis on AI through Amazon Web Services. With its valuable iPhone product and growing services segment, Apple boasts impressive revenue and a high return on capital.
Domino’s Pizza, the world’s largest pizza chain, has shown consistent growth and resilience over the decades. As investors navigate the current market volatility, keeping Buffett’s wisdom in mind can help them stay the course and potentially reap significant rewards in the long term.
Image Credits: Photo by Markus Spiske on Unsplash
