Warren Buffett, The Chairman, and CEO of Berkshire Hathaway is one of the most successful investors in history. Buffett knows most investors don’t know how to handle a bear market. Just the thought of a bear market sends some investors to the nearest tavern to drown their investment sorrows. But Buffett isn’t one of those knee-jerk investors who runs away from the opportunities that come with a bear market.
The Oracle of Omaha is the name his followers use when Buffett starts talking about investment opportunities. The people who own stock in Buffett’s holding company Berkshire Hathaway believe Warren knows how to make money in good times and in bad.
Buffett wrote his annual letter to his shareholders this year, and he told them there will be a major decline in stock prices going forward. He told shareholders investors panic when values start to tumble because no can predict a stock landslide. But he also told investors all corporate stocks will be victims of this new bear market. But he also wrote that in times like these investors should remember two important truths. The first truth is fear is an investor’s friend because it offers them an opportunity to take advantage of bargain prices. And the second truth is fear is every investor’s unwarranted enemy. Buffett told the group the investors who avoid unnecessarily high costs and just sit with a collection of conservatively-financed American business stocks will do well in a bear market.
One of Mr. Buffett’s favorite quotes is: “Be fearful when other investors are greedy and be greedy when other investors are fearful.” Buffett thinks holding on to stocks through thick and thin and even buying stocks when the market seems sour is the right thing to do.
But following Buffett’s advice can be a challenge for novice investors who are in the market for the short-term. The investors who want to ride the overvalued stock market train until it crashes are the investors who lick their wounds and run for an investment safe haven. But the investors who stay on that stock train while it goes through its financial reincarnation are the investors who get what they want from the market, according to Buffett.
Stock investing isn’t for people who are afraid to lose. All stock investors suffer loses. But the investors who suffer losses and get back up and make informed investments, and wait for them to blossom are the stock investors who win in a bull or a bear market, according to Mr. Buffett.