5 Rules of WARREN BUFFETT For Investing in Stock Market During Market CRASHES

5 Rules of WARREN BUFFETT For Investing in Stock Market During Market CRASHES

#warrenbuffett #investingforbeginners #stockmarket #stockmarketcrash

Are we likely to face a stock market crash in the next 12 months? The FTSE 100 has remained resilient so far, and inflation in August was less than expected. However, that doesn't mean we couldn't see a stock market crash in the near future. According to Warren Buffett, the bull run of the past 10 years is ending. Buffett is the best investor the world has ever seen and it is totally worth taking his advice when it comes to investing and the stock market. Over the years, through all the market's ups and downs , his company Berkshire Hathaway has provided a total return of over 3.6 million % through their various acquisitions and stock investments. A big chunk of that success is Buffett's exceptional ability to invest during market crashes.

Welcome back to Financial Goals and in this video we take a look at 5 rules from Warren Buffett to keep in mind while investing during a stock market crash. Stay tuned and watch

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Since Warren Buffett took over Berkshire Hathaway in 1965,the S & P 500 has seen 12 negative years and in 10 of those 12 years Berkshire still managed to beat the S & P. And now in 2022, which is also expected to be another negative year, Buffett now at the ripe old age of 91 is still making big moves. Buffett is still investing billions of dollars into the market despite the slump. So what does Buffett do to have so much faith in the market and how can you learn from Warren Buffett? Well , it is easier than you think. These are basic rules that need to be followed in order to succeed at investing during a slump and an oncoming crash

Avoid panic selling
Panic selling a good stock during a recession is one of the biggest mistakes made by newbie investors and investors who aren't well educated about investing in the stock market. No matter how much a stock bleeds during a recession, you shouldn't sell it if you think it's a good stock. Of course, always do your research before investing in a stock. However, its natural for a stock's value to fall during a recession. A good stock plummeting will certainly send jitters down the spine of even an old experienced investor, never mind someone who started investing during the bull run of 2020. A time when the stock market appears to only move in one direction.

Before you decide to sell your stock in a panic, keep this instance always in mind.

Suppose you have a nosy neighbor that every day comes to you with a new offer to purchase your house. One day he's offering you 800,000 $ and the next day he's offering 500,000 $. Then one day he just comes up to you feeling very sad and feels like the property market might collapse and says he only offers you 350,000 $? Are you going to sell him your house? Obviously not right?

You need to have that same frame of mind when investing in the stock market and not pulling out your investment during a crunch. If you own a piece of a great business, and the business goes on to lose value during a market crash, don't go ahead selling it off at a depreciated price.

A famous quote from Buffett reads : the stock market is the only place where investors run out of the store during a sale.

This is extremely flawed logic, so don't be that guy. Sell a stock if the fundamentals have changed. If the price downturn is due to a factor that will permanently impair the business' ability to generate cash flow in the future, and it no longer makes sense to hold the company then that's the right time to sell your stock.

Seize the opportunity
As a long term investor you might already know that market dips can be a great opportunity to buy and invest.

One great quote from Buffett that comes to mind in such a situation is : ``A simple rule dictates my buying: Be fearful when others are greedy and be greedy when others are fearful."

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