3 Reasons Not to Worry About a Stock Market Crash, According to Warren Buffett

The last couple of years have been a rollercoaster for the stock market. After bottoming out in the early stages of the COVID-19 pandemic, the market went on to shatter record after record.

Earlier this year, though, stock prices took a tumble, and the S&P 500 officially entered correction territory. While prices have rebounded in recent weeks, with all the uncertainty in the world right now, some investors worry another downturn is inevitable.

Nobody can say for certain what the future has in store for the market. But if there is another crash looming, there are a few reasons why you shouldn’t worry, according to famed investor Warren Buffett.

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1. Investing is a long-term strategy

It’s easy to get caught up in the day-to-day market fluctuations, and it can be nerve-wracking when prices start to fall. But one of Warren Buffett’s hallmark investing strategies is to buy solid companies and hold them for the long term.

If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes. — Warren Buffett

Despite short-term volatility, the stock market has a long history of earning positive average returns over time. Even if the market crashes, there’s a very good chance it will recover eventually. By maintaining a long-term outlook and avoiding any knee-jerk reactions to daily fluctuations, your investments have a better chance of recovering from any potential volatility.

2. Downturns can be a smart buying opportunity

While it may sound counterintuitive, market downturns can actually be a great chance to buy more. Stock prices are lower during market dips, meaning you can load up on high-quality investments at a lower cost.

Warren Buffett doesn’t fear market crashes and corrections. In fact, he embraces them, taking the opportunity to invest heavily at a discount.

Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble. — Warren Buffett

Before you buy, though, make sure you can afford to invest right now. You should be caught up on all your bills, and it’s also wise to have an emergency fund with at least six months’ worth of savings set aside. If your financials are healthy and you have cash to spare, then you can consider investing it to take advantage of the lower prices.

3. Research can help your investments thrive

It’s always important to research your investments before you buy, but it’s especially critical during periods of volatility. When the market is thriving, even subpar stocks can perform well. But not all stocks can survive downturns, and weaker companies are less likely to rebound.

Before you invest, make sure you’re researching the business behind the stock. Strong organizations make for strong investments, and if the company’s underlying fundamentals are solid, that stock has a better chance of recovering from a market crash.

We own stocks based upon our expectations about their long-term business performance and not because we view them as vehicles for timely market moves. That point is crucial: Charlie [Munger] and I are not stock-pickers; we are business-pickers. — Warren Buffett

It’s a challenging time right now to be an investor. While nobody knows for certain whether a market crash is on the horizon or not, downturns are not as daunting as they may seem. By keeping Warren Buffett’s advice in mind, you can rest easier knowing you’re prepared for whatever may happen with the market.

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