Investing in the stock market has been a roller-coaster ride of late.
The S&P 500 shed 2.4% on Monday as investors digested President Donald Trump’s latest round of attacks on Federal Reserve Chair Jerome Powell, which have included talks of his “termination” should the central bank fail to lower interest rates.
Powell’s dismissal would be unprecedented and, according to Powell, impermissible under current law.
On Tuesday, stock prices bounced more than 1.5% in early trading. All told, as of Tuesday afternoon the broad U.S. stock market is down about 14.5% from its February high.
Given the administration’s capricious approach to economic policy, experts warn to expect continued turbulence.
“We’re really thinking about this as a bit of an endless environment in terms of direction … and that’s in particular because we just don’t know where tariffs end up,” Robert Haworth, senior investment strategist at U.S. Bank, told CNBC. “This is a market trying to get clarity on direction, and not getting a lot of conclusions.”
It can be hard to know what to do amid topsy-turvy times in the market. That’s why Berkshire Hathaway chairman and investing legend Warren Buffett generally sticks to a straightforward guideline.
“A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful,” Buffett wrote in an op-ed for the New York Times in 2008, amid the mania of the global financial crisis, explaining why he was continuing to buy U.S. stocks through the downturn.
Capitalize on fear to build wealth
On Monday, investors were fearful that the current administration could undermine the Federal Reserve, which is charged with keeping inflation in check and preventing the economy from sliding into recession. Add to that overarching fears that Trump’s steep tariff policies could disrupt supply chains, reignite inflation and stoke the flames of trade wars that could slow the global economy.
Over the short term, these are all valid fears, and if you’re in a situation where you need to live on income from your investments — say, if you’ve recently retired — it’s worth discussing these potential outcomes with your financial advisor.
For Buffett, however, investing is a long game, played over the course of decades. If you have goals that are decades away, following his philosophy is simple. When other investors’ fears drive stock prices down, continue to invest in a broadly diversified portfolio at bargain prices.
Historically, Buffett’s strategy has worked thanks to the long-term upward trajectory of U.S. businesses. The forces that drive markets downward, he pointed out in 2008, are often temporary.
Source: https://www.cnbc.com/2025/04/22/warren-buffetts-simple-rule-to-build-wealth-when-the-market-falls.html