Warren Buffet is one of the most successful investors in history—and when recessions hit, others look to him for advice.
- Warren Buffett is the CEO of Berkshire Hathaway and one of the most successful investors in the world, with a net worth of over $104.4 billion.
- Most economic analysts predict an immediate recession, with some saying we’ve already entered one.
- Despite the stress, Buffett sees recessions as an opportunity and recommends investors buy undervalued assets while holding their current assets through the recession.
Why it’s Important
In times of stress, economists look to leading voices and figures for advice and ideas to safeguard and bolster their investments. Buffett isn’t just one of the leading investors in the world but someone that investors look to for advice on how to profit off of a downturn.
“His unifying strategy for all his investments was to purchase them at a time when the market severely undervalued them compared to their true worth, often buying companies at prices less than the book value of their assets,” says Forbes.
The old advice for investors is to “buy low, sell high.” Recessions offer plentiful opportunities to purchase assets cheaply, while valuation and purchasing power is lower.
Buffett similarly warns against impulsive actions, though. An investor needs to think with the long-term in mind, building a collection of diverse investments and letting them accrue value over time. Ignoring “hiccups” can allow investors to hold valuable investments when they become profitable years down the road.
“Bad news is an investor’s best friend. It lets you buy a slice of America’s future at a marked-down price … Investors who avoid high and unnecessary costs and simply sit for an extended period with a collection of large, conservatively-financed American businesses will almost certainly do well. Businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records for five, 10, and 20 years from now,” says Buffett.