Warren Buffett and the silver lining in Trump’s disastrous economy: “Bad news is an investor’s best friend”
This week investors in the United States have felt the consequences of an unstable economy policy.
President Donald Trump has sparked a stock market tumble as he pushes through with a series of tariffs on the United States’ trading partners. In recent days the Nasdaq has reached its lowest level since 2020, while the S&P 500 has also taken a tumble.
Trump is known to take the stock market as a sign of strength in the US economy so he may well be fretting over the latest figures. However some will stand to gain from this decline in stock prices.
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What did Warren Buffett say about investing opportunities?
Warren Buffett is one of the most successful investors of all time and currently boasts a net worth in excess of $160 billion. He is the chairman and CEO of Berkshire Hathaway and has built a career out of spotting opportunities to invest in undervalued assets.
In 2008 during the depths of the financial crisis, Buffett wrote a piece in the New York Times entitled ‘Buy American. I am.’ in which he claimed that “bad news is an investor’s best friend.”
He maintained that economic downturns also offered investors a better entry point in their positions, allowing them to buy cheaper and enjoy the profits when the uptick in value comes. Buffett wrote: “Be fearful when others are greedy, and be greedy when others are fearful.”
“You’ve got to be prepared, when you buy a stock, to have it go down 50%—or more—and be comfortable with it, as long as you’re comfortable with the holding,” he continued.
Essentially Buffett suggests that, rather than looking at the cyclical ups and downs of the stock market, investors should be trying to assess whether a stock is currently undervalued or overvalued. He argues that shares of companies with some intrinsic value are likely to increase in value once the short-term conditions have changed and investors who bought in while the market was low are well-placed to reap the rewards.
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