Nervous About the Stock Market? Here's Warren Buffett's Investing Advice

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Over most of the last decade, the stock market has been on an incredible bull run. But those types of highs can often make the lows more difficult to stomach, and many investors are feeling nervous right now.

If you’re exhausted by the market’s rollercoaster of ups and downs over the past year, you’re not alone. However, things aren’t necessarily as bad as they might seem, and this advice from legendary investor Warren Buffett could make it easier to get through these tough times.

How long will this bear market last?

When we’re in the thick of a downturn, it can be tough to see the light at the end of the tunnel. And while nobody — even the experts — can say exactly when this bear market will end, we do know that it will eventually give way to a bull market.

In 2008, Warren Buffett wrote an opinion piece for The New York Times. Although today’s bear market differs from the financial crisis and Great Recession, there are still valuable lessons from previous economic downturns.

Image source: The Motley Fool.

“Let me be clear on one point: I can’t predict the short-term movements of the stock market,” Buffett writes in the article. “I haven’t the faintest idea as to whether stocks will be higher or lower a month or a year from now.”

“What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up,” he continues. “So if you wait for the robins, spring will be over.”

Buffett’s prediction in 2008 was accurate, as the market went on to experience the longest bull run in history immediately after the Great Recession. If you had invested during the market’s lowest point, you would have likely seen substantial returns over just the following few years.

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Now more than ever, it’s important to keep a long-term outlook. It’s possible that the market may get worse before it gets better, and there could potentially be a recession on the horizon.

However, the market has been through plenty of serious crashes and recessions in the past, and it’s always managed to recover. By staying focused on the future, it can be easier to weather the short-term storms.

Is it safe to invest right now?

It’s normal to feel uncertain about investing during periods of volatility, but according to Buffett, times like these are some of your best buying opportunities.

“A simple rule dictates my buying,” he writes in the Times piece. “Be fearful when others are greedy, and be greedy when others are fearful.”

When the market is in a slump, stock prices are significantly lower. While that can be discouraging on the surface, it also means now is a fantastic time to buy high-quality stocks at a steep discount.

The record-breaking bull market we’ve experienced over the past decade may be good for your portfolio, but it’s also been an incredibly costly time to buy. With stock prices plummeting, right now may be one of the most affordable buying opportunities of the decade.

How to make the most of the upcoming bull market

Again, nobody can say for certain when this bear market will end and the next bull market will begin. But the upswing is coming sooner or later, and now is the time to prepare.

The best thing you can do right now is to invest in quality stocks from healthy companies. These stocks may have taken a beating over the past year, but if their business fundamentals are solid, they’re far more likely to rebound when the market recovers.

When that happens, you could potentially see lucrative returns. For example, when Amazon was rebounding from the Great Recession, it saw returns of more than 1,000% in just over five years.

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Of course, not all companies will experience this level of growth. But the best way to take advantage of a bull market is to invest in stocks at their lowest points and simply wait for the recovery period.

“In short, bad news is an investor’s best friend,” Buffett writes. “It lets you buy a slice of America’s future at a marked-down price.” The market may not look too promising at the moment, but by preparing for the inevitable upswing now, you could be well-positioned for potentially lucrative returns.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Katie Brockman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends The Motley Fool has a disclosure policy.