3 Stock Crash Tips From The Essays of Warren Buffett

Concepts from The Essays of Warren Buffett are faily easy concepts to understand. This is my account I dropped extra money into during the dip and look what it has done. I bought the dip and have done extremely well from my returns since then. Don't let fear cloud your judgement.

"Be greedy when others are fearful and fearful when others are greedy." - Warren Buffett

warren buffett but the dip


A perfect example of this is when I was working at the financial planning company. Everyone and their dog was calling in march 2020 and asking why their portfolio is dropping so much. The vast majority of them were asking to pull their investments and put it in a cash position.

Warren Buffett crash

Imagine the loss you would have if you had pulled your positions and less than a month later the stock market was above where it was pre-crash. That one would sting. What Warren buffet means by this example is that making sure you're still investing when the market is dropping is a good thing.

I personally have some wild returns from that time. I was able to drop about $3,000 dollars into the stock market over that 3 week period and that $3,000 turned into about $7,000. But that isn't even the end. The money I invested will likely be worth $70-80k by the time I retire. I bought at a shockingly low price and I capitalized on it.

Fear is not the way to invest. You need to remember that if you just hold you have nothing to worry about. The people who pulled out of the market lost a ton, then they likely bought in higher than they were at. Be greedy when market crashes happen. Be fearful and dollar cost average in when others are being greedy. It is simple as that.

The Essays of Warren Buffett

Warren talks a lot about buying stock of companies he understands. A perfect example of this piece of advice is a lesson he learned as a kid. He sold soda pop to his neighborhood. He saw that everyone drinks soda! He knew that is an industry that will do well in good and bad times. Learn these principles from The Essays of Warren Buffett

Let's say you are a computer programmer, you understand how tech companies work way better than most of the other people out there. This gives you a massive edge up on other people in that category and allows you to see past the typical challenges other see in a company.

Ring doorbell was actually on Shark Tank. They didn't make a deal but it was because the creator of the company knew it was a space that hadn't been updated in far too long. But you work in tech and can see that investing into a company that allows you to see who is stealing all your amazon packages. Wow you see a lot of value in that.

Guess who else saw value in that? Amazon themselves. They bought the company and turned it into a billion dollar company. They've sold wild amount of doorbell cameras and have improved the doorbell experience for millions of people.

Invest in what you know

The same can got for any hobby you have. If you're way into art, woodworking, technology, or cars you have more knowledge which will allow you to choose a stock that can perform better in that industry than most other people. Because you understand it.

You've likely done research organically because you were interested in working on that one project and learned that is the only company with an extremely useful product. Use this information to help you in your research when buying stocks. This will massively help you make better trades.

Young Warren Buffett

Do not beat yourself up over plays that you could have or not have done. This will turn you into an emotional investor. Emotional stock investors statistically perform worse than someone who doesn't invest with high emotions.

Remember earlier when I was getting calls about the march 2020 stock market crash? Those people were emotionally wanting to sell their stocks. They didn't have a plan in place, which made them emotional. If you are prepared and have gone through the thought process of what you'd do if the stock market dropped 30% tomorrow you will lose.

Even people who are in retirement or about to retire won't be affected as much as they may think when it comes to these market crashes. If you are taking income from your investments remember that more often than not you are pulling income from your stocks that are performing great! how many people pat themselves on the back because they are doing this? I'd even venture to say that very few people even think that.

Warren Buffett smile

Buy The Dip

Stock market crashes are an opportunity for you to buy in low and discounted stocks or ETFs. If you aren't retired stay calm and remember that you are going to be fine. Keep investing through the ups and the downs and you'll come out on top. Historically it's proven that the stock market only goes up over time.

Keep your head cool and you will make better decisions. This has to do with every part of your life really. Say someone cuts you off while you're driving. You are mad at that person and your focus leaves the important part of keeping yourself and others safe in your car. It happens I get it, but ultimately it's not worth it to take your eye off your financial end goals because you missed a trade, or you made a poor trade, or you are scared because the market crashed.

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