Warren Buffett once revealed the biggest risk with the US stock market — here's how to capitalize on it

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What’s the biggest risk investors face in the stock market? Depending on who you talk to, it could be anything from tariff uncertainty to geopolitical conflicts. It might even be angst amid rising recession fears.

However, according to Warren Buffett, the biggest risk is shared by all three: short-term thinking.

“Over time, we think it highly likely that gains will prevail – why else would we buy these securities? – though the year-by-year numbers will swing wildly and unpredictably,” Buffett wrote in Berkshire Hathaway’s 2025 stakeholder letter.

“Our horizon for such commitments is almost always far longer than a single year. In many, our thinking involves decades. These long-termers are the purchases that sometimes make the cash register ring like church bells.”

Buffett has been consistent about this perspective for years.

“Stocks are safe for the long run and they’re very unsafe for tomorrow,” the legendary investor and Berkshire Hathaway CEO told CNBC in 2017.

Here’s why the Oracle of Omaha resists the temptation to get caught up in short-term stock market speculation.

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Managing short-term volatility

The markets have been on a wild swing over the last few weeks, with uncertainty regarding tariffs causing the S&P 500 index to record one of the most volatile weeks ever ending April 11.

“The data in hand so far suggests that growth has slowed in the first quarter from last year’s solid pace,” Jerome Powell, the Chair of the Federal Reserve, told the Economic Club of Chicago on April 16.

“Tariffs are highly likely to generate at least a temporary rise in inflation. The inflationary effects could also be more persistent.”

Markets have see-sawed since Trump’s April 2 reciprocal tariff announcement. Concerns persist about tariff-driven inflation and a potentially slowing economy.

Cutting through this noise can be challenging, especially with weekly shifts in U.S. economic policy.

Read more: Thanks to Jeff Bezos, you can now become a landlord for as little as $100 — and no, you don’t have to deal with tenants or fix freezers. Here’s how

“If you think you can jump in and out or that you know the time to come in, I think you’re making a mistake,” Buffett said in the same CNBC interview.

But consulting a financial advisor can help you drown out the noise and filter for the information to secure your financial future.

Finding a trustworthy financial advisor is easier than ever with Advisor.com. All you have to do is answer a few questions about your finances and goals, then Advisor.com will comb through its database to match you with a FINRA/SEC-registered fiduciary advisor best suited for your needs.

From there, you can set up a free introductory call with no obligation to hire to see if they’re the right fit.

Investing in long-term prospects

Buffett rarely makes short-term predictions, but he’s been remarkably candid and confident about his long-term investment thesis.

“No matter what the headlines say … American business is going to do fine over time,” Buffett said during an interview with PBS in 2017.

“I’ve owned stocks consistently since 1942,” Buffett added. “I was buying stocks the day before the [2016] election. I was buying stocks the same day after the election. Had Hillary been elected, it would’ve been the same thing.”

Instead of trying to time the market, the Oracle of Omaha recommends consistently investing in a low-cost index fund for most everyday investors.

“Keep buying it through thick and thin, and especially through thin,” Buffett said during a separate interview with CNBC in the same year.

Another way to build a base for your financial future is through setting aside a little money every day. One way to do this is by turning everyday spending into an investment opportunity with Acorns.

Here’s how it works: Once you link your debit and credit cards, you can sit back and relax while Acorns builds your portfolio. Every time you make a purchase Acorns will round up the transaction to the nearest dollar and set aside the difference. Once you hit $5 in savings it’s automatically invested into a smart investment portfolio of diversified ETFs.

So, a $4.25 coffee turns into a $0.75 investment in your future. What’s more, you can receive a $20 bonus investment when you sign up with Acorns. For those who want a more active investment role, you can also automatically invest in low-cost-diversified ETFs on a monthly basis.

Diversify your portfolio with alternative assets

While Buffett believes that your stock portfolio will hold up fine over the long term, diversifying with alternative assets can help you hedge against market swings.

In short, don’t put all your eggs in one basket.

Saving for retirement with gold

Gold has historically been touted as a relatively safe investment alternative and a hedge against inflation.

You can combine the recession-resistant nature of gold with the tax benefits of an IRA by opening a gold IRA with the help of Thor Metals. Their IRA specialists can help you each step of the way — from working with IRS-approved depositories to drafting flexible investment plans.

Plus, you can get up to $20,000 in complimentary precious metals on qualifying purchases and a free wealth preservation guide when you sign up with Thor Metals.

Hedging with real estate

Another option that can protect your portfolio is real estate. This market typically has some resiliency against inflation but has long been the domain of institutional investors

However, with Arrived everyday investors can buy into single-family homes and vacation rentals across the United States.

With just $100, you can own shares in pre-vetted properties hand-picked for their investment potential. This way, you can become a landlord without having to deal with the hassles of property ownership, midnight maintenance calls or tenant management.

Once you invest with Arrived you can sit back, relax and collect monthly payouts from any rental income generated.

Another option is investing in commercial real estate for those with more cash on hand. While commercial properties have higher risk they can also offer higher returns.

Accredited investors can tap into the commercial real estate market by investing in grocery-anchored properties through First National Realty Partners (FNRP).

With a minimum investment of $50,000, you can own shares of grocery-anchored retail properties leased to national brands like Walmart, Kroger, Whole Foods and CVS. These retailers typically have a lower risk profile since they sell necessity-backed goods across the country.

FNRP’s team of experts handles every component of the investment cycle allowing you to reap the benefits without any operational headaches.

Thanks to FNRP’s triple net lease structure investors don’t have to worry about tenant costs eating into their potential returns.

How it works is simple: Answer a few questions – including how much you want to invest – and start browsing their full list of available properties.

Accessing art as an asset

Another popular asset that has little correlation with the stock market is art. Returns on contemporary art outpaced the S&P 500 index by 43%, between 1995 and 2024. What’s more, 52% of art experts predict the market for modern and contemporary art will improve in 2025, according to a survey conducted by Merrill Private Wealth Management.

Investments in blue-chip art used to be reserved only for the ultra-wealthy. Masterworks is changing that by enabling everyday investors to join in on multimillion-dollar art investments.

To date, each of Masterworks’ 23 sales has individually returned a profit to investors. Even better, investors realized representative annualized net returns like +17.6%, +17.8% and +21.5% among assets held for longer than a year.

It’s easy to get started with  Masterworks, and you can even skip the waitlist to invest in blue-chip art.

See important Regulation A disclosures at Masterworks.com/cd.

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.