Key Takeaways
- Jumping into popular assets when everyone else does usually means you’ve missed the opportunity
- Buffett points out that Berkshire has experienced three separate declines exceeding 50% during his tenure
- Skipping just the top 10 performing market days can slash your long-term portfolio growth by over half
- Index funds with low fees are Buffett’s top pick for retail investors navigating turbulence
- Prioritize stable, long-term holdings instead of speculative or fashionable investments
The Oracle of Omaha recently shared his perspective with CNBC regarding market turbulence and the approach young investors should take during downturns. His guidance remains clear and rooted in his extensive investing career.
At 95 years old, Buffett transitioned away from his CEO role at Berkshire Hathaway late last year. Even in retirement, he continues to be among the most influential figures in the investment world.
When both the Dow Jones Industrial Average and Nasdaq Composite entered correction territory in late March amid technology sector worries and geopolitical tensions, Buffett maintained his composure.
His reaction was measured and calm. “Three times since I’ve taken over Berkshire, it’s gone down more than 50%,” he explained to CNBC. “This is nothing.”
Buffett frequently cautions against joining investment frenzies late in the cycle. His famous observation — “What the wise do in the beginning, fools do in the end” — perfectly captures the danger of buying surging assets after the smart money has already entered.
The dotcom era provides a textbook example. As 1999 drew to a close, countless investors rushed into internet companies without evaluating their business fundamentals. The subsequent collapse wiped out numerous firms.
The cryptocurrency boom followed a similar pattern. Early adopters who grasped the technology’s potential profited handsomely. Late arrivals who invested at peak prices because of FOMO typically sold at substantial losses when values plummeted.
Why Panic Selling Destroys Wealth
Exiting the market during downturns can devastate your portfolio’s long-term performance. Consider this: investing $10,000 in the S&P 500 during 2006 would have expanded to approximately $81,000 by late 2025 — assuming you remained fully invested.
But if you happened to miss only the 10 strongest-performing days within that timeframe, your returns would plummet to roughly $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 investor whose holdings had declined approximately 10%. The young man was contemplating liquidating his S&P 500 index fund position.
Once Balcom demonstrated that the portfolio maintained solid diversification and the decline represented only temporary noise, the investor decided to maintain his position.
The Power of Diversification and Patience
For years, Buffett has championed low-fee, broadly diversified index funds for typical investors. Distributing capital across numerous companies minimizes the impact when individual sectors stumble.
Balcom generally initiates younger investors with the Schwab 1000 Index ETF, which follows 1,000 of America’s largest corporations and charges just 0.03% annually.
Thomas Van Spankeren, serving as chief investment officer at RISE Investments in Chicago, recently guided a client toward reducing concentrated technology exposure. His recommendation included adding dividend-paying equities, small-capitalization stocks, and international market positions.
“Buy and hold is very important, but you also need to know what you own,” Van Spankeren emphasized.
Buffett mentioned that he’s prepared to put cash to work — but exclusively in genuinely compelling businesses that he intends to own for the long haul, rather than pursuing quick profits.
