It’s Warren Buffett Time Again
You know we’re in a stock market correction when Warren Buffett quotes start popping up. A recent Motley Fool piece from MSN Money on November 20, 2018 points to many useful bits of advice…
- “Stocks can fall far…and they can fall fast.” A major decline could be right around the corner. Stocks fall often and in unpredictable ways. While we can’t predict, we can prepare. At the depths of a decline it’s useful to have more stable assets (e.g. bonds or cash) to sell in order to buy stocks at cheaper prices.
- “Remain calm.” Assuming reasonable intelligence, investors need temperament to control the urge to sell. Remember 10% declines occur about once a year while 20% drops happen every 3 ½ years (Yardeni Research).
- “Don’t try to time the market.” Major dips will happen but no one can tell you when the light will go from green to red.
- “Don’t view stocks as ticker symbols.” Investors must think like business owners. You all own a piece of wonderful businesses around the world. Stock prices rise and fall while your business interests persist.
- “Stay invested.” Despite major downturns, the wealth building returns over time (e.g. the last 90 years) are very strong (~10% since 1926; Morningstar).
- “Go shopping.” Market declines are the time to shop for bargains. Ironically, I’m writing this on Black Friday.
- “Stay focused on the long haul.” Don’t get trapped by popular headlines or near-term forecasts. Remain an owner of strong businesses with a long-term view.
- “Remain calm and be patient.” Stocks have survived a depression, recessions, and numerous corrections. Recoveries happen!
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