Author: BitpushNews Mary Liu

"When others are greedy, be fearful; when others are fearful, be greedy." This simple yet profound motto comes from the mouth of 94-year-old billionaire investor Warren Buffett.

The market prophet, known as the "Oracle of Omaha," has once again validated the value of this saying with his precise judgment—he seems to have foreseen that Donald Trump's policies could bring a storm to Wall Street.

Yesterday, Wall Street experienced a "Black Monday," with the market plummeting, confirming Buffett's "prophecy." Investor concerns about an economic recession intensified, triggering panic selling in the market. The S&P 500 index fell more than 9% from its historical high on February 19, just a step away from a "correction" (defined as a drop of 10% or more from a previous high). Among the top 10 billionaires, only Buffett's net worth increased against the trend.

For Buffett, the market crash undoubtedly reaffirms the foresight and correctness of his investment strategy.

Preparing for the "Trump Recession"

Buffett's Berkshire Hathaway has been continuously reducing its stock holdings in recent years, amounting to tens of billions of dollars, while hoarding massive cash reserves.

Data shows that Buffett has sold more stocks than he has bought for nine consecutive quarters, including significant reductions in shares of several well-known companies. As early as last year, before the Trump administration took office, Buffett began selling off most of his Apple stock and reduced his investments in Bank of America and Citigroup.

In the past few months, Berkshire Hathaway's cash reserves have skyrocketed to an astonishing $334 billion, accounting for more than one-third of its entire investment portfolio. Shockingly, this cash reserve exceeds the total market capitalization of all companies listed on the UK's FTSE 100 index.

Buffett is a typical long-term investor who prefers to sit on the sidelines, patiently waiting for the best opportunity rather than blindly chasing market trends and fads.

Despite holding a massive amount of cash, Buffett has explicitly denied the notion that he "prefers cash over stocks." In his February letter to shareholders, he emphasized: "While some commentators believe Berkshire's cash position is unusually large, most of your funds are still invested in stocks, and this investment preference will not change."

Panic Spreads, Buffett's Maxim Becomes a "Golden Rule" Again

In times of market volatility, it is worth listening again to the advice of this investment legend.

In his 2017 letter to shareholders, he wrote: "In the short term, it is impossible to predict how much the stock market may decline." But he immediately added that if a significant drop does occur, remember this passage from Rudyard Kipling's classic poem "If," written around 1895:

"If all around you are losing their heads, and you can keep yours… If you can wait and not be tired by waiting… If you can think—and not make thoughts your aim… If you can trust yourself when all men doubt you… Yours is the Earth and everything that's in it."

Why does staying calm lead to rewards?

It is noteworthy that Buffett is referring to significant declines in the U.S. stock market, such as the bear market from 2007 to 2009, during which the S&P 500 index's market value shrank by more than 50%. Compared to that time, the pullback investors are currently experiencing is far less severe.

In fact, market pullbacks are a normal part of capital market operations. Data from Bedel Private Wealth Management shows that since 1980, the S&P 500 index has experienced 21 declines of 10% or more, with an average annual drop of 14%.

Indeed, during times of market upheaval, investors often find it challenging to accurately predict future trends. As Buffett wrote in 2017:

"No one can tell you when these (crashes) will happen. The traffic light can turn from green to red at any time, with no yellow light to buffer."

Buffett firmly believes that periods of market downturns contain "extraordinary opportunities." Historical data has repeatedly proven that the market will eventually return to an upward trajectory, and all value investors need to do is patiently wait and take full advantage of the market downturn to "pick up" cheap assets.

Data from Hartford Funds shows that since 1928, the average duration of a bear market in the U.S. stock market has been less than 10 months—defined as a drop of 20% or more from a recent high. For investors planning to invest for decades, the impact of a bear market is merely a brief moment in the long river of investment.

Therefore, even when experiencing the panic and torment of a bear market, one should always keep their eyes on the ultimate "prize"—the long-term financial goals for which they strive. Continuing to invest during market declines is akin to actively buying when stocks are on sale. As long as you adhere to a diversified investment strategy, the deeper the stock prices fall, the more advantageous the "bargains" you can acquire.

Buffett's investment philosophy resonates with a famous quote from his 2009 letter to shareholders, both emphasizing the importance of seizing investment opportunities during market downturns: "Big opportunities don't come often; when it rains gold, grab a bucket, not a thimble."

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