Monday, June 9, 2025
HomeMarketInvestors Are Doing Something We've Never Seen Before. Here's Warren Buffett's Best...

Investors Are Doing Something We’ve Never Seen Before. Here’s Warren Buffett’s Best Advice for the Situation.

-

[ad_1]

The stock market has been on an incredible run since the S&P 500 (SNPINDEX: ^GSPC) hit the bottom of the prior bear market in Oct. 2022. Since then, the index has increased about 70% as of this writing. Many stocks have seen even greater returns in that 26-month period.

Most people think those returns are just the start of a strong bull market. In fact, 56.4% of consumers expect stock prices to increase over the next year, according to the most recent U.S. Consumer Confidence report from The Conference Board. While that might not sound like an overwhelming share of the population, it’s a record high number since the survey started gathering this data 37 years ago.

Stock values are influenced by two major factors — financial results and investor sentiment — and many companies driving the bull market have produced incredible financial results over the last two years. But smart investors can’t ignore that more people are optimistic about the future returns of the stock market than ever, which has driven prices higher.

Warren Buffett has some apt advice for the situation.

A close up of Warren Buffett.
Image source: The Motley Fool.

In Oct. 2008, the S&P 500 had already fallen 40% from its 2007 peak, and many investors thought things could only get worse. In an op-ed for The New York Times, Buffett wrote, “Fear is now widespread, gripping even seasoned investors.” Indeed, U.S. consumers had never been more pessimistic about the future of the stock market, according to The Conference Board’s survey.

Buffett was compelled to remind readers of the simple rule he laid out in Berkshire Hathaway‘s (NYSE: BRK.A) (NYSE: BRK.B) 1986 letter to shareholders. “We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”

When Buffett wrote those words in 1987 (to recap Berkshire’s 1986 financial results), he noted, “Little fear is visible in Wall Street.” At the time, investors had bid up stock prices, and as a result, he couldn’t find any suitable equity investments for Berkshire’s portfolio. Instead, he piled about $700 million of Berkshire’s cash into Treasury bonds.

He wasn’t particularly thrilled about it, either. “At best, the bonds are mediocre investments,” he said. “They simply seemed the least objectionable alternative at the time.”

In 2008, he applied the same exact idea to the market with opposite results. He moved his personal portfolio from 100% government bonds to 100% U.S. equities. It proved an extremely fortuitous move for the Oracle of Omaha. The S&P 500 hit its bottom a few months after Buffett published his op-ed and went on to produce incredible returns over the next 15 years.

[ad_2]

Source link

LATEST POSTS

Soft Play Bus Essex with Squeeze Rollers & Dizzy Discs – A Fun-Filled Mobile Adventure

In today’s world of children’s entertainment, finding activities that combine physical play with safety and creativity can be a challenge. The Soft Play Bus Essex offers a...

WitchSpin Casino: Daily ₱777 Bonus Explained

Online casinos attract players by offering exciting games and generous bonuses. One of the most popular features of WitchSpin Casino is its daily ₱777 bonus....

Gaming and Adventure Combined: The Ultimate Guide for Norwegian Tourists

For many Norwegian tourists, traveling is all about exploring new places, immersing themselves in different cultures, and seeking unforgettable adventures. But what if your journey...

Non-Disclosure Agreement for Customer Privacy Protection

In today's digital age, privacy concerns are more significant than ever, especially when it comes to safeguarding the personal and sensitive information of customers. Businesses...

Most Popular

spot_img