“Investors who avoid high and unnecessary costs and simply sit for an extended period with a collection of large, conservatively-financed American businesses will almost certainly do well.”
In other words, don’t fall victim to widespread panic and begin selling off stocks, because wealth-generating investments are long term.
“American business – and consequently a basket of stocks – is virtually certain to be worth far more in the years ahead. Innovation, productivity gains, entrepreneurial spirit and an abundance of capital will see to that … Many companies, of course, will fall behind, and some will fail,” he wrote.
Most importantly, it’s impossible to predict when economic crises will happen, Buffett said, but they’re inevitable.
President Donald Trump seems to share the same sentiment as Buffett. As the US stock market experienced record losses leading up to Christmas, Trump on Christmas Eve told reporters that right now is “a tremendous opportunity to buy” stocks.
“We have companies, the greatest in the world, and they’re doing really well. They have record kinds of numbers,” Trump said.
Staying in the market over the long term is a proven way to build and sustain wealth.
John, a self-made millionaire who runs the personal-finance blog ESI Money, interviewed 100 millionaires over the past few years and found that many of them employed Buffett’s signature investing strategy: They invest in low-cost index funds, and they tended not to give into the temptation of frequently changing their investments.
This story first appeared in Business Insider. Read it here or follow BusinessInsider Australia on Facebook.