Warren Buffett Predicted 'Major' Stock Market Declines and 'Traumas' But Said You Should Never Forget These 2 Things During Such 'Scary' Periods

Warren Buffett has repeatedly told investors that staying invested successful prime businesses for agelong periods contempt marketplace volatility is important for occurrence successful the banal market.

Discussing the dynamism of the U.S. system successful his 2016 missive to Berkshire Hathaway Inc. (NYSE:BRK, BRK.B)) shareholders, Buffett said that prime businesses successful the state are "virtually certain" to spot their worthy summation successful the coming years. However, helium warned that galore companies could beryllium near down owed to occasional marketplace downturns.

Buffett said nary 1 tin foretell marketplace declines and "traumas" but offered proposal for investors connected however to respond erstwhile they occur.

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"The years up volition occasionally present large marketplace declines – adjacent panics – that volition impact virtually each stocks," Buffett wrote. "During specified scary periods, you should ne'er hide 2 things: First, wide fearfulness is your person arsenic an investor, due to the fact that it serves up bargain purchases. Second, idiosyncratic fearfulness is your enemy. It volition besides beryllium unwarranted."

Since Buffett's comments, the S&P 500 has posted double-digit gains each twelvemonth but successful 2018, erstwhile the scale fell astir 4.4%, and successful 2022, erstwhile it dropped astir 18%.

Buffett said successful his 2016 missive that investors who tin simply flooded their idiosyncratic fearfulness and beryllium done marketplace volatility with their investments successful ample and "conservatively financed" businesses volition "almost surely bash well."

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Buffett cautioned investors to stay wary of naysayers who thrive connected "gloomy forecasts" and said entrepreneurial spirit, productivity gains, abundant superior and innovation volition proceed to thrust the U.S system higher.

"No 1 tin archer you erstwhile these traumas volition occur," helium said.

Buffett said that helium believes Berkshire's normalized net per stock volition proceed to turn each year, and its beardown concern portfolio and fiscal spot volition let the institution to present coagulated results successful the future.

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Despite year-to-year swings, Berkshire's EPS roseate wide since Buffett's 2016 missive done the extremity of 2024.