Warren Buffett, the famous investor and CEO of Berkshire Hathaway, soothed investors’ fears with his most recent missive. He stuck to his line that the stock market will eventually recover, insisting investors keep a long-term mindset. He declared that U.S. businesses have weathered many such crises in history, even world wars and financial panics. Even with these challenges, they’ve always found their way back to profitability.
In an op-ed for the New York Times in 2008, Buffett articulated his confidence in the resilience of American companies. He pointed out that the stock market tends to recover over time, stating, “Over the long term, the stock market news will be good.” His investment philosophy inspires all of us to stand strong when the seas are stormy and to keep our eyes on what matters most—our long-term purpose.
That’s a track record of recovery reflected in many of Buffett’s historical insights. He argued that 20th-century challenges, such as the Great Depression and oil shocks, put tremendous stress on U.S. enterprises. None of these challenges could prevent their continued, explosive growth. In his view, the big players will be making record profits for decades to come.
Robert Haworth, senior investment strategist at U.S. Bank, seemed to agree with Buffett’s message. He focused attention on the long-term prospects of good companies with strong fundamentals. He stated, “Fears regarding the long-term prosperity of the nation’s many sound companies make no sense.” Haworth’s analysis indicates that today’s fears are missing the underlying lucrative potential of these companies.
“A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful.” This principle has unerringly guided his actions, even when it meant behaving contrary to the market in times of downturn. In the last bear market from 2007 to 2009, the S&P 500 dropped over 50%. Against this backdrop, Buffett went off on a truly inspirational tangent urging investors to invest in U.S. stocks.
He has further moved his own portfolio from bonds into U.S. stocks, a move that indicates his long-term confidence in them. Buffett’s point was that external pressures can push markets down in the short-term, but they are almost always short-lived. His approach conveys the important lesson that investors should never be influenced by what’s going on in the short-term—especially the scary headlines.
Buffett’s wisdom strikes a chord with millions of confused investors looking for a lighthouse in today’s tempestuous market. Haworth remarked on the present market environment, stating, “This is a market trying to get clarity on direction, and not getting a lot of conclusions.” Such uncertainty breeds caution among investors, but Buffett’s strategy offers a road map for maneuvering through these uncertain waters.
Honestly, historically, this investment strategy worked because of the long-term increasing trend of U.S. businesses. He believes that consistent investments in U.S. stocks will yield positive results for those with patience and a long-term vision. Ultimately, this philosophy helps get investors through their first instinct to pull out, even when the market seems most discouraging.