Warren Buffett announced on Saturday, May 3rd, 2025 that he is stepping down as CEO of Berkshire Hathaway as of 12/31/2025. The 94-year-old investor has had a great ride and done very well for his investors.
What can we learn from him? Many things. Let me highlight one: the importance of staying invested. He famously said “The stock market is designed to transfer money from the Active to the Patient.” Said another way: staying the course has paid off for long-term investors.
When markets are volatile, it’s hard to resist the urge to do something. Suggestions to stay the course offer little comfort when markets and emotions are spiraling. But in many cases the best course of action has been none at all.
Consider two contrasting perspectives of the same 10-year period ending in 2024. The short-term view shows monthly swings in the market, the most dramatic being the 12% decline in March 2020 as COVID gripped the world and froze the global economy. (see graph)
The long-term view shows a hypothetical $10,000 investment over the same time frame. Staying invested through the entire decade, riding out the ups and downs of the pandemic, would have more than tripled the investment to $34,254.
The lesson? Market declines can be painful to endure, but rather than trying to time the market, investors would be wise to stay the course. To weather market volatility, they should seek diversification across stocks and bonds, while periodically examining their risk tolerance for elevated volatility. Though it may feel like this time is different, markets have shown resilience throughout history when confronted by wars, pandemics and other crises.
Time for second opinion on your portfolio? Reach out to schedule your free consultation.
Plus, your weekly market update.
