Warren Buffett reveals his 'simple rule' for thriving during market swings

The stock market has been on a rollercoaster ride in 2025. 

Since January, the US’s three main indexes — the Dow Jones, S&P 500, and Nasdaq — tumbled as much as 20 percent at their lows. While they’ve recovered somewhat over the past two weeks, they remain down between five and nine percent. 

At the same time, there have been wild single-day movements, with stocks plummeting and soaring on tariff news.

Investors searching for guidance have returned to a voice that once steadied the markets during a historic meltdown. 

Warren Buffett, the 94-year-old investment icon known as the ‘Oracle of Omaha’ and CEO of Berkshire Hathaway, is widely regarded as the most trusted figure in modern finance. 

In 2008, at the height of the global financial crisis triggered by the subprime housing collapse, Buffett wrote a New York Times op-ed that cut through the panic.

‘A simple rule dictates my buying,’ he wrote. ‘Be fearful when others are greedy, and be greedy when others are fearful.’

In 2025, fear has once again taken hold.

Markets have been in turmoil over compounding crisis: President Donald Trump has imposed tariffs on consumer goods and kicked off a series of international trade wars. Major companies have slashed their financial forecasts. Americans are facing the long-delayed reckoning of $1.6 trillion in student debt.

The mood on Wall Street has darkened enough that major banks are sounding alarms. 

Analysts at JPMorgan Chase recently pegged the chances of a US recession at 60 percent. 

For Buffett, there is an easier way to read the market that cuts through the nervousness.  

The investor has long promoted a straightforward metric known as the Buffett Indicator. 

The indicator measures the total value of the US stock market against the country’s gross domestic product, or GDP. 

In other words, it compares what investors are willing to pay for companies to the actual amount of money sloshing through the US economy. 

When the ratio rises well above 1, it can signal that investors are getting overly greedy. When it falls closer to or below 1, it can suggest that fear is running the show. 

Right now, the Buffett Indicator sits at more than 1.6 — a level that suggests markets are extremely overheated relative to the economy underneath them. 

Buffett’s own moves appear to reflect that wariness. 

Rather than diving headfirst into the market, he has been steadily building a mountain of cash. 

At the end of 2024, Berkshire Hathaway reported $334 billion in cash on hand — more than triple what it held just two years earlier. 

He has not stopped investing altogether, but the moves he has made show a cautious eye on global opportunities. 

Buffett invested in a trading house of Japanese manufacturers, put $1.2 billion into a Mexican beer and liquor brand, and even snapped up stocks of a sattelite radio technology company. 

If stocks continue to stumble, Buffett’s strategy may once again point the way forward. 

Back in 2009, when the market bottomed out and the Buffett Indicator plunged to under 0.6, he scooped up stocks in industries that looked boring but were built to endure.

The key component for all these stocks: they were deeply unsexy. 

Buffett bought shares of railroad logistics companies, banks, food producers, and some healthcare providers.  

Eventually, these stock options continued to rise, and the stock market rebounded from the 2008 recession to make multiple record highs. 

Buffett’s message then remains just as sharp today. 

‘Fears regarding the long-term prosperity of the nation’s many sound companies make no sense,’ he wrote at the time. 

‘These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now.’