{"id":9906,"date":"2022-06-26T20:22:21","date_gmt":"2022-06-27T01:22:21","guid":{"rendered":"http:\/\/blog.jlbn.net\/?p=9906"},"modified":"2022-06-26T20:22:22","modified_gmt":"2022-06-27T01:22:22","slug":"warren-buffetts-4-rules-for-investing-in-a-bear-market","status":"publish","type":"post","link":"http:\/\/blog.jlbn.net\/?p=9906","title":{"rendered":"Warren Buffett&#8217;s 4 Rules for Investing in a Bear Market"},"content":{"rendered":"\n<ul><li>Warren Buffett&#8217;s investing career has spanned 13 bear markets.<\/li><li>Buffett likes to increase investing activity in bear markets &#8212; he views it as buying quality merchandise on sale.<\/li><li>Staying calm can help you manage through a bear market without doing anything you&#8217;ll regret later.<\/li><\/ul>\n\n\n\n<h2>Sometimes, the best course of action is doing nothing.<\/h2>\n\n\n\n<p>Warren Buffett began his investing career in a bear market. He bought his first stock in the early 1940s at age 11 as the&nbsp;<strong>S&amp;P 500<\/strong>&nbsp;was on its way to a 35% dip&nbsp;that bottomed in 1942. Since then, he&#8217;s managed through 12 more bear markets not including this one.<\/p>\n\n\n\n<p>Despite those downturns,&nbsp;<a href=\"https:\/\/www.fool.com\/investing\/how-to-invest\/famous-investors\/warren-buffett-investments\/stocks-owned\/\">Buffett<\/a>&nbsp;has managed to create billions in value for himself and the shareholders of the company he runs,&nbsp;<strong>Berkshire Hathaway<\/strong>. If any investor is qualified to share wisdom on investing in&nbsp;<a href=\"https:\/\/www.fool.com\/investing\/how-to-invest\/bear-market\/\">bear markets<\/a>, it&#8217;s Buffett.<\/p>\n\n\n\n<p>So it makes sense to lean on his expertise to get through this tough climate with your wealth intact, right? To get you started, here are four of Buffett&#8217;s famous rules for investing in a bear market.<\/p>\n\n\n\n<h2>1. Buy quality merchandise on sale<\/h2>\n\n\n\n<blockquote class=\"wp-block-quote\"><p><em>&#8220;Whether we&#8217;re talking about socks or stocks, I like buying quality merchandise when it is marked down.&#8221;<\/em><\/p><\/blockquote>\n\n\n\n<p>Buffett invests in high-quality businesses &#8212; companies with a proven ability to create shareholder value through all economic climates. In his view, bear markets provide opportunities to buy these quality stocks at lower prices.<\/p>\n\n\n\n<p>As an example, Buffett&#8217;s response earlier this year to the\u00a0<a href=\"https:\/\/www.fool.com\/investing\/stock-market\/market-sectors\/information-technology\/\">tech stock<\/a>\u00a0sell-off was to buy more of his favorite technology company,\u00a0<strong>Apple<\/strong>. Although Apple already comprised more than 40% of Berkshire Hathaway&#8217;s portfolio, Buffett bought another 3.78 million shares.<\/p>\n\n\n\n<p>You can mimic his strategy by identifying stocks you love for their long-term prospects. If your budget allows,&nbsp;<a href=\"https:\/\/www.fool.com\/investing\/how-to-invest\/stocks\/buy-the-dip\/\">increase your investing<\/a>&nbsp;activity and pad your share counts while prices remain low.<\/p>\n\n\n\n<h2>2. Hold forever<\/h2>\n\n\n\n<blockquote class=\"wp-block-quote\"><p><em>&#8220;Our favorite holding period is forever.&#8221;<\/em><\/p><\/blockquote>\n\n\n\n<p>When you buy stocks you&#8217;d like to&nbsp;<a href=\"https:\/\/www.fool.com\/investing\/how-to-invest\/stocks\/buy-and-hold-strategy\/\">hold forever<\/a>, bear markets become far less stressful. Since your plan is to hold for the long run, you don&#8217;t have to do anything when the market goes sideways. No reshuffling your portfolio and no guessing when share prices will bottom out. Your only job is to wait.<\/p>\n\n\n\n<h2>3. Stay calm<\/h2>\n\n\n\n<blockquote class=\"wp-block-quote\"><p><em>&#8220;The most important quality for an investor is temperament, not intellect.&#8221;<\/em><\/p><\/blockquote>\n\n\n\n<p>It&#8217;s normal and useful to second-guess your &#8220;hold forever&#8221; plan when circumstances change. Certainly, there will be times when you should drop a stock you thought was a keeper.<\/p>\n\n\n\n<p>The distinction you must make is whether circumstances have changed permanently or temporarily. And that&#8217;s easier to do when you can analyze what&#8217;s happening calmly and rationally. If you let your emotions take over, they can convince you to scrap your plan, cut your losses, or take some other dramatic action that&#8217;s sure to dampen your long-term returns.<\/p>\n\n\n\n<h2>4. Keep your distance<\/h2>\n\n\n\n<p>Buffett said this when asked what advice he had for investors in tough markets:&nbsp;<em>&#8220;I would tell them: Don&#8217;t watch the market too closely.&#8221;<\/em><\/p>\n\n\n\n<p>Let&#8217;s say you&#8217;re confident that your &#8220;hold forever&#8221; stocks can withstand a&nbsp;<a href=\"https:\/\/www.fool.com\/investing\/2022\/06\/22\/how-long-will-bear-market-last-what-history-shows\/\">temporary bear market<\/a>. And for that reason, you&#8217;re not going to react to falling share prices. In that scenario, what&#8217;s the benefit of tracking every bump along the way? There isn&#8217;t one.<\/p>\n\n\n\n<p>It&#8217;s OK to keep some distance from financial headlines when the market is going crazy. Consider it a survival strategy that helps you stay calm and stick to&nbsp;<a href=\"https:\/\/www.fool.com\/investing\/general\/2015\/10\/19\/stick-to-your-investing-plan-heres-why.aspx\">your investing plan<\/a>.<\/p>\n\n\n\n<h2>Buy or do nothing<\/h2>\n\n\n\n<p>When a bear market sets in, you&#8217;ll see Buffett mostly buy or hold. If you&#8217;re questioning whether those are the right moves for your portfolio, remember this: Buffett is worth about $95 billion, and he has invested through more bear markets than almost anyone. His tactics can help you emerge from this bear market stronger and wealthier than ever.<\/p>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Warren Buffett&#8217;s investing career has spanned 13 bear markets. Buffett likes to increase investing activity in bear markets &#8212; he<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[254,3421,3422],"tags":[3443,888,3425,3445],"_links":{"self":[{"href":"http:\/\/blog.jlbn.net\/index.php?rest_route=\/wp\/v2\/posts\/9906"}],"collection":[{"href":"http:\/\/blog.jlbn.net\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/blog.jlbn.net\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/blog.jlbn.net\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/blog.jlbn.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=9906"}],"version-history":[{"count":1,"href":"http:\/\/blog.jlbn.net\/index.php?rest_route=\/wp\/v2\/posts\/9906\/revisions"}],"predecessor-version":[{"id":9907,"href":"http:\/\/blog.jlbn.net\/index.php?rest_route=\/wp\/v2\/posts\/9906\/revisions\/9907"}],"wp:attachment":[{"href":"http:\/\/blog.jlbn.net\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=9906"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/blog.jlbn.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=9906"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/blog.jlbn.net\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=9906"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}