Since the start of 2025, Warren Buffett’s Berkshire Hathaway (NYSE:BRK.B) has actually underperformed against the S&P 500. But the same was true in 2021. And yet in the following years, Berkshire’s share price surged by almost 70% compared to the S&P’s 49.5% (including dividends).
Over the long term, Buffett’s strategic investments have vastly outperformed, particularly during times of economic and stock market turmoil. And we could be on the verge of entering another period of high volatility.
Since the latest earnings season kicked off, several Magnificent Seven stocks have taken a big hit. Meta saw its market-cap drop by over 17%, while Microsoft and Nvidia are both down near 10% in November so far.
Of course, not all leading businesses have stumbled, with Alphabet and Apple proving to be more resilient, and Amazon even jumping on its results. But overall, a growing number of stocks have plunged on their latest results.
Yet by making the right moves, phenomenal returns can potentially be unlocked. With that in mind, what advice does the ‘Oracle of Omaha’ have when investing during shaky market conditions?
1. Don’t panic
Buffett has repeatedly stated that the stock market transfers wealth from nervous to patient investors. Making emotionally-driven decisions during market downturns is a guaranteed way to lock in losses and potentially miss out on explosive long-term gains.
Instead, investors should remain focused on the underlying business and its fundamentals. Berkshire’s investment portfolio is filled exclusively with companies that have substantial competitive advantages, talented management, and ample long-term profit potential.
These sorts of companies rarely trade at attractive valuations. But that can quickly change during a market correction or crash. And as such, instead of panic-selling like everyone else, Buffett and his team often start buying.
We’ve seen this first-hand in 2020 when the billionaire started snapping up shares in Apple, American Express, Chevron, and Occidental Petroleum, among others.
2. Have some cash on the sidelines
When markets start getting frothy, Buffett has always built a cash position on Berkshire Hathaway’s balance sheet. And as of 2025, that’s risen to a jaw-dropping $382bn.
It’s clear Buffett’s following his own advice and preparing to capitalise on bargains that could materialise if the stock market decides to throw a tantrum.
Could this have already started? It’s certainly possible. And we’ve even seen some famous short sellers like Michael Burry (who successfully predicted the 2008 financial crisis) start placing enormous bets against stocks like Nvidia.
Yet, Buffett’s always cautioned against timing the market. Instead, he’s often advocated for holding on to high-quality stocks even during the volatility. Why? Because accurately predicting a stock market crash is almost impossible. And in most cases, simply holding on to top-notch stocks generates the best results.
That’s why, despite seemingly growing cautious and trimming some of his positions, Berkshire Hathaway still has hundreds of billions invested in US stocks.
Therefore, when following Buffett’s example, the best move right now could be to build a bit of cash and hunt for the best businesses to invest in. Even if the valuation’s too high to buy today, a potential stock market correction could quickly change that. And it’s the investors who are prepared that can unlock the most wealth in the long run.
