Should You Really Buy Stocks During Market Turbulence? These Words From Investing Giant Warren Buffett Offer an Answer That’s Strikingly Clear.
The stock market was the place to be over the past three years, with the S&P 500 roaring to record highs in the bull market — and delivering a 78% gain in that time period. Investors were eager to get in on growth stocks, which generally benefit most from positive market environments, and they put a particular focus on stocks in the areas of artificial intelligence (AI) and quantum computing.
But in recent weeks, uncertainties have accumulated, weighing on investor sentiment. This has driven a great deal of volatility in the market, as we can see through the fluctuations of the S&P 500. Against this backdrop, you might be wondering if you should really buy stocks right now.
During difficult times, it’s a great idea to turn to one specific person for advice: Warren Buffett, the investing giant who led Berkshire Hathaway to market-beating returns over 60 years. (Buffett retired from the chief executive officer role at the end of last year, but he remains chairman.)
And the good news is we don’t have to figure out a way to meet Buffett and ask him our investing question, as he’s spoken extensively on the subject over time — and his advice is evergreen. Should you really buy stocks during market turbulence? The following words from Buffett offer an answer that’s strikingly clear.
Image source: The Motley Fool.
What’s driving stock performance
First, though, let’s take a closer look at the positive and negative points that have driven stock performance in recent years through today. As mentioned, investors eagerly scooped up AI and quantum computing stocks in an effort to get in on potentially game-changing technologies. This resulted in many of these players soaring. Investors also favored growth stocks beyond the tech space amid optimism about a lower interest rate environment — this backdrop is known to favor earnings growth as companies can borrow more cheaply and benefit from increased consumer spending on their products and services.
Though concerns about import tariffs hurt stocks last spring, they rebounded as agreements were reached and certain tariffs weren’t applied. Meanwhile, the AI and quantum computing growth stories continued. But in recent weeks, a multitude of concerns have emerged, weighing on investors’ minds — from the potential for AI revenue to fall short of expectations to worries about the war in Iran.
All of this has prompted some investors to halt their investing plans or even sell some of their stocks.
Today’s Change
(-1.52%) $-103.18
Current Price
$6672.62
Key Data Points
Day’s Range
$6670.40 – $6740.88
52wk Range
$4835.04 – $7002.28
Volume
3.5B
Wise words from Warren Buffett
Now, let’s consider our question — and the Warren Buffett words that address it. Should you really buy stocks when the market is in turmoil? One thing to keep in mind is that during these times, many quality stocks often get caught up in the action — meaning they fall even though their long-term prospects remain bright. This is because some investors get scared off and flee the market.
In a shareholder letter dating back to 1986, Buffett wrote these evergreen words about the Berkshire Hathaway investment strategy: “We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”
This means Buffett aims to buy stocks when they’re down — and others are fleeing. As a result, he has purchased top-quality stocks for very reasonable prices. And it doesn’t matter to Buffett if one of his recent purchases falls further since the billionaire is known for holding on to stocks for the long term — this offers that stock plenty of time to recover and gain.
So, should you apply this strategy now, amid the current market volatility? Yes, but as Buffett has always done, on a stock-by-stock basis. This means carefully selecting companies with a strong track record of growth and prospects you can count on over time — and choosing ones that have reached reasonable or even cheap valuations.
Buffett’s answer to our question is strikingly clear: When others are fearful, it’s time to be greedy and get in on quality long-term stocks for a bargain.
