Image source: The Motley Fool

Warren Buffett is rightly considered one of, if not the best living investor on the planet. However, if I want to make the most of his wisdom, I think it’s essential that I put Buffett’s teachings into practice when the markets are in turmoil rather than when everyone is dancing in the streets. In other words, NOW!

So here’s what I do.

Feel the fear and buy anyway

Buffett is no stranger to stock market sellouts. At 91, he has seen Mr. Market go from optimist to pessimist and back to optimist on several occasions. And yet, he managed to become a billionaire in the process. Which give?

Well, one of his best-known rules is to “Be greedy when others are afraid“. Right now, I would say the latter is very much the case. Inflationthe rise in interest rates, the war in Ukraine, there is no shortage of subjects for reflection.

True to his word though, Buffett has spent billions of dollars in this 2022 market sell-off. Citigroup and media giant World Paramount. He also bought energy companies Chevron and western oil. Video game developer ActivisionBlizzard and tech giant HP were also on his shopping list.

I also bought, adding to my position in a beat growth fund Scottish Mortgage Investment Trust in July. It is down 40% this year. Attractive!

Wait… as Buffett would

Buying during a market crash is all well and good, but it won’t mean anything if I don’t hang on to what I’ve bought long enough to see it pay off. Again, I’m taking inspiration from Buffett here: “If you don’t feel comfortable owning a stock for 10 years, you shouldn’t own it for 10 minutes..”

I suspect “10 years” was an arbitrary number, but that’s not the point. Ultimately, he urges people to avoid thinking like traders and focus on becoming business owners. Its not always easy. Round-the-clock coverage of the global economy threatens to turn even the most optimistic individual into an impulsive mouse clicker.

Buffett will not be swayed. Unless something he owns has a problem that will seriously jeopardize his ability to make money, he doesn’t do anything. That’s why he owned stocks like Coca Cola for so long (and made a lot of money in the process).

So I think the worst thing I can do right now is crystallize losses in existing positions. The second worst thing I can do is sell what I just bought because it doesn’t increase in value immediately.

I’m a fool, not a mug

At the end of the day, no one knows where the markets are going and tries to time things precisely is a cup game. There are simply too many factors that dictate stock prices for the human brain to calculate, at least consistently. And that includes Buffett’s brain.

Here is the good news. Although history is only a very rough guide, buying when everyone is selling increases the probability (but not the certainty) that my final result will be good. Go back to any past crisis and no matter what happened, it plays out the same. Markets are recovering.

Like Buffett, I use this market chaos to accumulate quality stocks. I think that’s the dumb thing to do.


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