5 Warren Buffett quotes that could help you prosper in this stock market crash

Warren Buffett is the greatest investor of all time. Here’s his advice for a stock market crash.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

When investing feels challenging, as it does at the moment, I always find it useful to draw on the wisdom of the greatest investor of all time, Warren Buffett.

Since Buffett began investing in the 1960s, he’s experienced a number of steep stock market declines, including the 1973/1974 crash, the ‘Black Monday’ crash in 1987, and the Global Financial Crisis (GFC) of 2008/2009. Yet he’s still managed to generate returns of over 2,000,000% for his investors. With that in mind, here are five gems from Buffett that I think are particularly relevant right now.

“Widespread fear is your friend as an investor because it serves up bargain purchases”

This quote is a great place to start in the current environment because investor fear levels have been off the charts recently. Indeed, the CBOE VIX index, which is often referred to as the ‘fear index’, has risen to a level not seen since the GFC. Buffett suggests we should use this fear to our advantage. As he says, fear serves up bargains.

“Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble”

This quote refers to the fact that compelling buying opportunities (bear markets) don’t come around all that often. For example, the last time stock prices fell as much as they have recently was 2008. Buffett’s advice? Don’t be afraid to buy up big when stocks are super cheap. You don’t want to look back at this time as a missed opportunity.

“The best thing that happens to us is when a great company gets into temporary trouble… We want to buy them when they’re on the operating table”

This is another top quote that is very relevant right now because there are a lot of great companies that appear to be in temporary trouble, due to the coronavirus.

Take alcoholic beverages champion Diageo, for example. This is a top-shelf company with a fantastic track record and a compelling future growth story. Yet its share price has tanked because, in the near term, it’s likely to see a hit to profits due to the coronavirus. This temporary setback could be an amazing buying opportunity for investors.

“We’re buying businesses to own for 20 or 30 years. We think the 20- and 30-year outlook is not changed by the coronavirus”

Buffett’s advice is to think long term-term, however, if you’re a buyer of shares in this market. Volatility could remain high for a while. So, if you buy a stock today, don’t worry about what it does tomorrow, next week, or next month. Instead, give yourself a long-term investment horizon, as he does.

“In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497”

Finally, this quote is a great summary of the type of shocks the stock market has to endure over time. Last century, stocks were impacted by all kinds of catastrophic events, all of which would have scared investors at the time. Yet the Dow Jones index still generated incredible long-term returns for investors. That’s certainly something to keep in mind right now, given the challenges we are currently facing.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Edward Sheldon owns shares in Diageo. The Motley Fool UK has recommended Diageo. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

Empty Stocks and Shares ISA? I’d snap up these 3 stocks to start with!

Sumayya Mansoor explains how she would start to build wealth from scratch with an empty Stocks and Shares ISA and…

Read more »

Concept of two young professional men looking at a screen in a technological data centre
Investing Articles

7.7% yield and going cheap! Why is this unknown FTSE 250 stock flying?

It's no household name, but there's one FTSE 250 stock with a high dividend yield and booming profits that looks…

Read more »

Photo of a man going through financial problems
Investing Articles

I’d stop staring at the Nvidia share price and buy this FTSE 100 stock instead

This writer reckons there is a smarter way to invest in Nvidia today without taking on stock-specific risk. Here is…

Read more »

Young lady working from home office during coronavirus pandemic.
Top Stocks

5 stocks that Fools have been buying!

Our Foolish freelancers are putting their money where their mouths are and buying these stocks in recent weeks.

Read more »

Young Asian man drinking coffee at home and looking at his phone
Dividend Shares

These 3 FTSE 250 stocks offer me the highest dividend yields, but should I buy?

Jon Smith considers FTSE 250 shares with a very high yield, but questions whether the income is going to be…

Read more »

View of Tower Bridge in Autumn
Investing Articles

Is FTSE 100 takeover target DS Smith a great buy?

A mega-merger between FTSE 100 giants DS Smith and Mondi has the City abuzz. But is there any value in…

Read more »

Young Black man sat in front of laptop while wearing headphones
Investing Articles

The WPP share price dips as profits fall. Here’s why it could be a top dividend buy

I'm starting to think the WPP share price undervalues the stock, especially if the long-term dividend outlook comes good.

Read more »

Black father and two young daughters dancing at home
Investing Articles

A £3K investment buys me 632 shares in 2 stocks for a second income!

This Fool explains how a second income is possible through dividend-paying stocks and details two picks that could help her.

Read more »