Warnings about a possible recession have been circulating for over a year, and they don’t seem to be fading away. Despite a robust economy and low unemployment, Forbes recently predicted a “mild recession” in late 2023 or 2024. If that happens, consider investing in the stock market. Warren Buffett, the billionaire CEO of Berkshire Hathaway, suggests following his lead. In a 2008 op-ed, he advised, “Be fearful when others are greedy, and be greedy when others are fearful. In simple terms, take advantage of fear of everyone else when they are selling at discounted prices. You should consider investing at that time. But that also need due care.
Buffett’s 15 years Old Advice
Buffett’s advice from 15 years ago during the Great Recession still holds true. Instead of trying to predict the market’s recovery, follow his principle of capitalizing on fear-driven opportunities. “Bad news is an investor’s best friend,” he wrote. It allows you to buy into America’s future at discounted prices.
Maintain Liquidity
Motley Fool reported Buffett’s 2023 strategy is to maintain liquidity before a recession. Keep cash on hand to make informed decisions rather than being forced into choices. While you may not amass billions like Berkshire Hathaway, avoid assets that tie up your cash.
Stick to Good Companies and People
In economic downturns, even blue-chip stocks suffer, but Buffett assures that it’s usually a temporary setback. Most major companies, he notes, will set new profit records in the long run. Stick to your normal investment plan; don’t abruptly stop or go overboard. Buffett recommends buying good businesses at a decent price, run by people you trust.
Recessions are Always Temporary
Resist the temptation to stash all your money in no-growth assets like risk-free accounts. Buffett asserts that equities will likely outperform cash over the next decade. Maintain a long-term outlook; while recessions are temporary, the stock market has historically shown a pattern of rising over time.
Long Term Focus
If your investments decline during a recession, don’t panic. Embrace the Buffett mindset that the market will bounce back, as history has consistently shown.