Warren Buffett’s advice for investors in times of violent volatility rings especially true today: Keep your cool, and you will be rewarded in the long run. The Oracle of Omaha once offered his view on the dramatic market rout in 1974, driven by rising inflation, an oil crisis and political instability surrounding the Watergate scandal. At the end of 1974, the Dow Jones Industrial Average was more than cut in half, down 52% from its 1972 peak, as stocks tumbled into a vicious bear market. “The country didn’t disappear or anything. It’s just people behave in extreme ways in markets. And over time, that’s very good for people that keep their heads,” Buffett said at Berkshire Hathaway’s annual meeting in 1997. The current market turmoil was triggered by President Donald Trump’s rollout, and subsequent suspension, of the highest tariffs on imports in generations. The blue-chip Dow suffered back-to-back 1,500 point losses for the first time since the average was first calculated in 1896. Earlier this month, the S & P 500 briefly tumbled into a bear market — down more than 20% from its February record high — before rebounding a little. .SPX 1M mountain S & P 500 over the past month. The 94-year-old investor could reveal his market outlook at Berkshire Hathaway’s annual meeting in two weeks. If history is any guide, the Berkshire Hathaway chairman and CEO, who views his stock holdings as small pieces of entire businesses, could reveal he’s taken advantage of depressed prices to hunt for bargains. “The stock market is there to serve you, and not to instruct you. And that’s a key to owning a good business, and getting rid of the risk that would otherwise exist in the market,” he said in 1997. Buffett has ample cash to deploy, with the Omaha-based conglomerate’s cash level exploding to $334 billion at the end of 2024 — a record high — and accountting for about 30% of total assets. Over the past year, Buffett turned aggressively defensive, peeling back his two biggest equity holdings — Apple and Bank of America . “It doesn’t make any difference to us whether the volatility of the stock market averages a half a percent a day or a quarter percent a day or 5% a day. In fact, we’d make a lot more money if volatility was higher, because it would create more mistakes in the market,” Buffett said. Get Your Ticket to Pro LIVE Join us at the New York Stock Exchange! Uncertain markets? Gain an edge with CNBC Pro LIVE , an exclusive, inaugural event at the historic New York Stock Exchange. In today’s dynamic financial landscape, access to expert insights is paramount. As a CNBC Pro subscriber, we invite you to join us for our first exclusive, in-person CNBC Pro LIVE event at the iconic NYSE on Thursday, June 12. Join interactive Pro clinics led by our Pros Carter Worth, Dan Niles, and Dan Ives, with a special edition of Pro Talks with Tom Lee. You’ll also get the opportunity to network with CNBC experts, talent and other Pro subscribers during an exciting cocktail hour on the legendary trading floor. Tickets are limited!
Warren Buffett on extreme behavior in markets: It’s very good for people who keep their heads
Apr 20, 2025
