Key Takeaways
Buying into popular assets after everyone else has jumped in usually means you’re too late to see meaningful profits
Severe market downturns are part of the investing journey — Berkshire itself has plunged more than 50% on three separate occasions
Being absent from the market for just the 10 strongest trading days can slash your long-term gains by over half
Everyday investors should consider low-fee index funds as their foundation for riding out market turbulence
Prioritize quality, long-horizon investments instead of chasing whatever’s currently trending
The Oracle of Omaha recently shared his perspective with CNBC on navigating market turbulence, offering clear guidance for investors just starting their wealth-building journey.
At 95 years old, Buffett officially retired from his role as chief executive of Berkshire Hathaway when last year concluded. Yet his influence in the investment world remains as powerful as ever.
When both the Dow Jones Industrial Average and Nasdaq Composite slipped into correction mode in late March — spurred by technology sector uncertainties and international tensions — Buffett maintained his characteristic calm.
“Three times since I’ve taken over Berkshire, it’s gone down more than 50%,” Buffett explained to CNBC. “This is nothing.”
He’s particularly vocal about the dangers of jumping on bandwagons after the parade has already passed. His famous saying — “What the wise do in the beginning, fools do in the end” — captures the hazard of buying assets only after they’ve already skyrocketed.
History offers plenty of cautionary tales. The dotcom mania provides a textbook example. As 1999 drew to a close, countless investors rushed into internet companies without examining their actual business fundamentals. The subsequent collapse wiped out numerous firms entirely.
The cryptocurrency frenzy followed a similar pattern. Sophisticated early adopters who grasped the technology’s potential reaped substantial rewards. Meanwhile, latecomers who purchased near all-time highs — driven by fear of missing out — frequently panicked and exited at significant losses when values plummeted.
Why Panic Selling Destroys Wealth
Bailing out during market declines can devastate your financial future. Consider this: investing $10,000 in the S&P 500 back in 2006 and maintaining that position through the end of 2025 would have yielded approximately $81,000.
However, if you happened to miss just the 10 strongest performing days across that timeframe, your ending balance would tumble to roughly $36,000, based on data from J.P. Morgan Asset Management.
Thomas Balcom, who established 1650 Wealth Management in Florida, recently counseled a 20-year-old investor whose holdings had declined approximately 10%. The young investor was contemplating liquidating his S&P 500 index fund position.
Once Balcom walked him through the fact that his portfolio maintained strong diversification and the decline represented temporary market noise, the investor decided to maintain his position.
The Power of Diversification and Patient Capital
Buffett has consistently championed inexpensive, broadly diversified index funds for regular investors. Distributing capital across numerous companies cushions the blow when individual sectors experience difficulties.
Balcom frequently initiates younger investors with the Schwab 1000 Index ETF, which follows 1,000 of America’s largest corporations and carries a minimal 0.03% expense ratio.
Thomas Van Spankeren, serving as chief investment officer at RISE Investments in Chicago, recently guided a client toward rebalancing away from technology-concentrated positions. His recommendation included incorporating dividend-paying equities, smaller company stocks, 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 currently holding cash reserves at the ready — but only for deploying into genuinely compelling businesses that he intends to own for the long haul, not for quick flips or short-term speculation.
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