It’s Warren Buffett Time Again
Written on November 26, 2018
SAM OGRIZOVICH, CFP®

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…

  1. “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.
  2. “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).
  3. “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.
  4. “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.
  5. “Stay invested.” Despite major downturns, the wealth building returns over time (e.g. the last 90 years) are very strong (~10% since 1926; Morningstar).
  6. “Go shopping.” Market declines are the time to shop for bargains.  Ironically, I’m writing this on Black Friday.
  7. “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.
  8. “Remain calm and be patient.” Stocks have survived a depression, recessions, and numerous corrections.  Recoveries happen!

Sam


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