10 Lessons of Sanity From Warren Buffett During Insane Markets

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There have been many concerns in the stock market and bond market in the second half of 2019. It is important to keep in mind that the major U.S. stock market averages are still up double-digit percentages year-to-date and that the bull market is now handily over 10 years old. Yet, the global growth story is faltering, Europe is heading ever deeper into negative interest rates as a technical recession brews, international tensions remain hot with Iran and North Korea, and the U.S. and China spat has turned into a real trade war. All this can be overwhelming for the average investor. That’s why it’s important to use advice and lessons from some of the smartest and most successful market masters, and one of them would have to be Warren Buffett.

The swings in the stock market have become frequent enough that some investors probably couldn’t guess if the market is up or down in 2019. The news flow of the modern era can be interrupted and reversed in a second based on a tweet. For the Average Joe, relying on some of the lessons and experiences from people like Buffett may be all they have left.

Periods of uncertainty can easily turn into ones of panic. After all, the media’s use of “recession” in headlines and in video has become rampant and about as improperly used as “decimated.” That said, a recession will come one day, and after a more than 10-year recovery, history dictates that it has to be closer to happening than farther away. So, what would Buffett do?

The public has trusted Buffett for decades, and more than a few people have considered him the world’s greatest investor of the modern age. He built Berkshire Hathaway Inc. (NYSE: BRK-A) into a $500 billion conglomerate, and as of June 30, 2019, Buffett and his portfolio managers owned about $208 billion worth of public stocks. Being called the “Oracle of Omaha” has to mean something in harder or more volatile times.

Chances are high Buffett knows more than just a thing or two about the markets and finance. In some ways, his conglomerate has acted like a holding company, mixed with private equity, employing hedge fund strategies and always trying to employ value and income investing trends with the ups and downs of the markets. Buffett even has acted as an investment banker and the lender of last resort.

24/7 Wall St. has tracked many topics and trends about Buffett over the years, major changes in his portfolio of stocks, many acquisitions and many interviews, and we have even referred back to the many books with Buffett’s wisdom.

One gem that Buffett always maintained is to be greedy when others are fearful, and fearful when others are being greedy. This message about not always following the crowd should be clear enough, but there are so many other rules and generalities that Buffett employs that it can be hard for the average investor to keep up.

Investors should keep in mind that many of the great business climate changes are only just now taking hold. Some changes in monetary policy that the public cannot control may not be fully reflected in the economy for months or even a year, in some cases.

The 10 lessons offered up here that employ Buffett strategies are certainly not the only considerations that investors should have. They are also not in any particular order. Here are 10 lessons of sanity for investors to always consider when markets begin to act less than sane.

1. Using Rules-Based Investing Strategies

It’s always important that investors consider what a company has for leadership, how defensible its business moat is and how profitable a company is. Jefferies once outlined the 13-point checklist that Buffett’s investments and acquisitions fit within. 24/7 Wall St. has even outlined 10 strategies for common investors to invest like Buffett using a mindful long-term view with a simple and straightforward approach.