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This week, President Donald Trump’s new tariffs sent shockwaves through the stock market, triggering a sharp sell-off as investors reacted to escalating trade tensions between the U.S. and China.
The Dow Jones Industrial Average plunged 1,400 points, marking one of its steepest declines in years. As the Magnificent 7 tech stocks – Amazon (AMZN-0.99%), Apple, and Tesla (TSLA-8.68%) among them – slid, concerns about price increases and supply chain disruptions began to grow.
In times like these, many investors look for guidance when the market turns volatile.
Warren Buffet, the chairman of Berkshire Hathaway (BRK.A-5.82%), has some advice when market declines occur: Stay calm and avoid panic.
In his 2017 shareholder letter, Buffet stressed the importance of sticking to a long-term strategy, regardless of how volatile the market becomes.
“When major declines occur ... that’s the time to heed these lines,” Buffet noted, pointing to Rudyard Kipling’s 19th century poem “If–.”
“If you can keep your head when all about you are losing theirs . . . 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.”
Buffet added that the market will always experience ups and down, and investing involves the risk that the expected objective won’t always be attained.
“The light can go from green to red without pausing at yellow,” he said. Those who stay financially secure and patient during downturns are the ones who ultimately emerge stronger, he added.
As Trump’s tariffs continue to rattle markets, create uncertainty, and spark volatility, Buffet’s advice is more relevant than ever. The legendary investor has previously likened the tariffs to “an act of war,” partly because “the Tooth Fairy doesn’t pay ‘em!”