Key Takeaways
- Jumping into popular investments after everyone else usually means you’ve missed the opportunity
- Market downturns are part of investing — Berkshire Hathaway has fallen more than 50% on three separate occasions
- Skipping the market’s 10 strongest days can slash your lifetime returns by over 50%
- Index funds with low fees are ideal tools for regular investors navigating market swings
- Prioritize quality, long-term holdings instead of speculative or fashionable picks
Warren Buffett recently shared his perspective with CNBC regarding market turbulence and how younger generations should respond when stock prices tumble. His guidance remains simple yet powerful, drawn from over six decades in the investment world.
The investing icon transitioned out of his CEO role at Berkshire Hathaway at year-end. Now 95, he continues to command attention as one of the investment community’s most respected figures.
During late March, both the Dow Jones Industrial Average and Nasdaq Composite slipped into correction mode. Technology sector worries and global political tensions fueled the decline.
Buffett remained unfazed. “Three times since I’ve taken over Berkshire, it’s gone down more than 50%,” he explained to CNBC. “This is nothing.”
Among Buffett’s core principles is a caution against joining investment crazes after they’re already hot. His famous saying — “What the wise do in the beginning, fools do in the end” — captures the danger of buying assets everyone’s already talking about.
This pattern emerged clearly during the internet bubble. As 1999 drew to a close, crowds rushed into tech stocks without examining business fundamentals. After the collapse, countless companies disappeared.
The pattern repeated with cryptocurrency. Those who entered early with genuine understanding profited. Latecomers who invested because of FOMO frequently exited with losses after prices plummeted.
Why Panic Selling Destroys Returns
Bailing out during market declines can devastate your investment returns over time. Someone who put $10,000 into the S&P 500 in 2006 would have seen it grow to approximately $81,000 by late 2025 — assuming they held steady through every downturn.
Simply missing the 10 strongest trading days throughout that timeframe would reduce that total to about $36,000, based on data from J.P. Morgan Asset Management.
Thomas Balcom, who founded 1650 Wealth Management in Florida, recently counseled a 20-year-old client whose holdings had declined roughly 10%. The young investor was contemplating liquidating his S&P 500 index fund position.
Once Balcom demonstrated the portfolio maintained solid diversification and the decline represented temporary volatility, the client decided to maintain his position.
Why Diversification and Patience Matter
Buffett has consistently championed low-fee, broadly diversified index funds for typical investors. Distributing capital across numerous enterprises minimizes the impact when individual sectors struggle.
Balcom usually introduces younger clients to the Schwab 1000 Index ETF, which follows 1,000 major U.S. corporations and charges just 0.03% annually.
Thomas Van Spankeren, chief investment officer at RISE Investments in Chicago, recently guided a client toward reducing concentration in technology stocks. His recommendations included incorporating dividend-paying equities, small-cap positions, and international market exposure.
“Buy and hold is very important, but you also need to know what you own,” Van Spankeren emphasized.
Buffett mentioned he’s holding cash reserves for deployment — but exclusively toward genuinely compelling businesses he intends to own for the long haul, not quick profits.
