Scared of a Market Crash? Warren Buffett Says That’s Your Cue To Get Greedy
Written by
Chris Adam
Edited by
Rebekah Evans
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Wall Street has seen some serious highs and lows in recent months. These stock market moves have raised some concerns about a recession or a market crash.
Fear can be a great motivator or a powerful roadblock for many investors. In fact, you may be familiar with the famous quote linked to Warren Buffett: “Be fearful when others are greedy and greedy when others are fearful.” The advice may sound simple, but it can bring with it unexpected complexities and more decisions to make as an investor.
But it may not be that clear cut. GOBankingRates talked to some financial experts for their advice about being fearful as an investor.
Impact on Personal Assets
“A down market might be the best time to buy assets for the lowest price possible,” said Annie Cole, Ed.D., money coach and founder of Money Essentials for Women. “While a down market can mean that your personal assets, such as home value or stock value, take a hit for a period of time, it also means that assets you don’t already own are lowering in price — the perfect time for you to buy for a bargain.”
Impact on Investors
“Fear is the worst enemy of investors,” said Robert Johnson, Ph.D., professor at the Heider College of Business at Creighton University. “The average investor underperforms the market because they panic.”
Johnson added that perhaps the biggest weakness in any stock investor is the person who believes they can predict market rises and falls. Johnson said attempting to time the market is “fools gold.”
“The best way to counteract this tendency to time the market is to practice dollar cost averaging in a broad based stock market mutual fund or ETF — like one that tracks the S&P 500,” Johnson said. “That means you are consistently buying into the market whether it has headed up, down or sideways.”
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