KOMPAS.com \u2013 Stock market volatility often triggers panic among\ninvestors. When prices fall sharply in a short period, many market\nparticipants rush to sell shares to avoid larger losses.<\/p>\n
In fact, throughout history, global stock markets have repeatedly\nfaced crises, recessions, and sharp corrections. Yet over the long term,\nmarkets have also shown the ability to recover and generate significant\nvalue growth.<\/p>\n
This is the perspective of the legendary investor Warren Buffett.\nOver more than six decades of investing, he has faced various market\nshocks, from the oil crisis, the 1987 crash, the 2008 financial crisis,\nto the global pandemic of 2020.<\/p>\n
These principles emphasise calm, a focus on fundamental business\nperformance, and readiness to seize opportunities when share prices are\ndiscounted.<\/p>\n
The first principle Warren Buffett stresses is to keep calm. He\nasserts that the stock market is designed to move money from impatient\ninvestors to those who are patient.<\/p>\n
Historical data reinforces this view. The long-term performance of\nthe S&P 500 shows that, although repeatedly hit by crises and\nrecessions, a US$100 investment in 1928 is now worth close to US$1\nmillion thanks to the power of compounding over the long term.<\/p>\n
To Warren Buffett, short-term volatility is not a reason to walk away\nfrom the market.<\/p>\n
This principle was evident during the global financial crisis of\n2008. When banking shares plunged, Buffett instead ploughed US$5 billion\ninto Goldman Sachs.<\/p>\n
That investment generated more than US$3 billion in profit for\nBerkshire Hathaway through high dividends and stock warrants.<\/p>\n
Citing Yahoo Finance, Buffett emphasises the importance of focusing\non the quality of the business, rather than daily price fluctuations. He\noften asks whether a price decline actually changes demand for the\ncompany\u2019s products or services.<\/p>\n
This approach was reflected when Berkshire bought The Washington Post\nin 1973 amid a falling market. The US$10.6 million investment grew to\nmore than US$200 million by 1985, rising by nearly 1,900 per cent.<\/p>\n
Another example is the investment in Coca-Cola after Black Monday in\n1987. In 1988, Buffett poured in around US$1.3 billion when the stock\nprice was depressed. Today its value is almost US$28 billion, not\ncounting about US$11.7 billion in dividends.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/5-warren-buffett-principles-when-the-stock-market-slumps-1772672197", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }