Key Takeaways
- Jumping into popular investments when they’re already hot usually means you’ve missed the opportunity
- Significant market downturns are part of investing — Berkshire itself has fallen more than 50% on three occasions
- Skipping the market’s 10 strongest days can slash your long-term portfolio growth by over half
- Everyday investors should lean on low-fee index funds to weather market turbulence
- Prioritize quality, long-horizon investments over fleeting trends and speculation
Warren Buffett recently shared his perspective with CNBC on market turbulence and how younger investors should respond when equity prices fall. His guidance is clear and grounded in his extensive investing track record.
Buffett transitioned out of his CEO role at Berkshire Hathaway at the close of last year. Now 95, he continues to be among the most influential figures in the investment world even after stepping back from daily operations.
When the Dow Jones Industrial Average and Nasdaq Composite both slipped into correction territory in late March amid technology sector worries and geopolitical uncertainty, Buffett maintained his characteristic composure.
His reaction was measured. “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 jumping into investments after they’ve already surged in popularity. His famous observation — “What the wise do in the beginning, fools do in the end” — captures the danger of buying assets that have already peaked.
This pattern emerged clearly during the internet bubble. As 1999 drew to a close, investors flooded into tech stocks with little regard for underlying business fundamentals. The subsequent collapse wiped out countless companies.
The cryptocurrency boom followed a similar trajectory. Sophisticated early adopters who grasped the technology secured profits. Latecomers who invested near the top because of FOMO often liquidated at steep losses when values plummeted.
Why Panic Selling Destroys Returns
Exiting positions during market declines can inflict severe damage on long-term wealth accumulation. An investor who placed $10,000 in the S&P 500 in 2006 would have seen it expand to approximately $81,000 by late 2025 — assuming they remained fully invested.
Being out of the market for just the 10 strongest trading days during that stretch would have reduced that amount 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 client whose holdings had declined approximately 10%. The young investor was contemplating liquidating his S&P 500 index fund position.
Once Balcom walked through the portfolio’s solid diversification and emphasized the temporary nature of the pullback, the client decided to maintain his position.
The Power of Diversification and Patient Capital
Buffett has consistently advocated for low-cost, broadly diversified index funds as the best vehicle for non-professional investors. Distributing capital across numerous companies minimizes the impact when individual sectors underperform.
Balcom frequently starts his younger clients in the Schwab 1000 Index ETF, which follows 1,000 of America’s largest corporations and charges just 0.03% in annual fees.
Thomas Van Spankeren, chief investment officer at RISE Investments in Chicago, recently guided a client toward rebalancing away from technology-concentrated positions. His recommendations included incorporating dividend-paying companies, small-capitalization 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 that he’s prepared to put capital to work — but exclusively in genuinely compelling businesses that he intends to own for the long haul, not for quick trading profits.
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