It has been a troubling few weeks in stock markets on both side of the pond, with both the FTSE 100 and S&P 500 well below the highs they set earlier in 2026. Volatile markets can offer opportunity for investors who are willing to see them the right way and act accordingly. One such investor is Warren Buffett, who has lived through plenty of bear markets in his decades of stock market investing.
In fact I think that learning from Buffett’s approach can be very helpful at a time like now, when looking to build wealth.
Start with a simple question
To begin, forget about the stock market altogether. Instead, think about a business you know and understand. Warren Buffett always tries to stick to businesses he understands.
Ask yourself what chance that business has to succeed over the long term.
How big is its target market, what competitive advantages does it have – and are they likely to endure?
Then consider its economic model. Sometimes a big business with massive sales can still lose money, so understanding a business model matters.
That process is how Buffett determines whether a firm is the sort of great business he would like to own.
Valuation is key to successful investing
But Buffett does not just talk about great businesses. He talks about buying into great businesses at attractive prices.
That is a crucial distinction. Even a brilliant business can make a lousy investment if someone pays too much for their stake in it.
Turbulent markets generally do not alarm the Oracle of Omaha. If the underlying value of a business whose shares he owns as a long-term investor remains the same, he does not care if the stock market values them lower during a period of volatility.
But such periods – like the one we are in now – can offer the savvy long-term investor an opportunity, if they enable them to buy into a great business for an unusually attractive price.
A share to consider
As an example, one share I think investors should consider is homewares retailer Dunelm (LSE: DNLM).
The Dunelm share price has crashed 29% since the start of the year. That means it now sells for just 11 times earnings, while offering a dividend yield of 5.7%.
In fact, although payouts are never guaranteed, the prospective yield over the medium- to long-term could be higher, as Dunelm often uses surplus cash to fund special dividends.
Why the share price fall?
Weak consumer confidence and an uncertain outlook for the property market threaten to eat into demand for homewares. Higher logistics costs due to soaring oil prices could make imports costlier for Dunelm, eating into profits. Last month the company told investors that, “the consumer environment remains challenging, with variable trading patterns”.
I see those as temporary challenges, though. Like Warren Buffett, though, I take the long-term approach to investing.
People will keep buying homewares, even though demand may wax and wane across the economic cycle. Dunelm has a proven, profitable business model.
Its many unique product lines help give it a competitive advantage, as do its brand and large estate of shops. At its current price, I see it as a potential long-term bargain — alongside some other shares in the current market!
