An older op-ed from billionaire and Berkshire Hathaway Chair Warren Buffett has several pieces of advice for investors nervous about market volatility and recession.
- Buffet says the most stressful periods can be among the most useful to invest during by taking advantage of stocks and assets below their peak values.
- “Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors,” he wrote in an op-ed for The New York Times during the 2008 recession.
- Volatility in the market does not mean it is a bad time to invest; it just means that looking at long-term outlooks is more important when you are waiting for an economic rebound.
- “I can’t predict the short-term movements of the stock market. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over.”
Why It’s Important
As The Motley Fool notes, economic uncertainty continues to drive a great deal of anxiety in the market. The Deutsche Bank’s researchers argued last month that a U.S. recession is likely later this year. Most analysts continue to consider inflation and recession the two most pressing concerns of the moment. High-interest rates make it all but certain that economic decline is likely in the future.
There is reason for optimism. The June jobs report came in hot, inflation is at its lowest rate of increase in two years, and Wall Street is anticipating a new Bull Market as major indexes continue to perform better than expected. However, it remains unclear whether this economic resilience will hold out in the long term, particularly after the Federal Reserve hikes interest rates again next Wednesday.
As Buffett notes in his 2008 op-ed, there is always an opportunity for investors to take advantage of the market and ongoing trends. Investors who make wise decisions—who chose stocks from healthy companies most likely to survive a recession—will be able to build a portfolio that survives the moment and thrives in the future.