The Berkshire Hathaway CEO had some wise words for investors before announcing that he intends to step down

Buffett is the master of get-rich-slow schemes. “I don’t get fearful of things that other people are afraid of,” he said.

What a difference a month makes. 

That applies to shareholders of Berkshire Hathaway and investors everywhere. After a tumultuous April, during which the S&P 500, Nasdaq and Dow Jones Industrial Average tumbled on the back of President Donald Trump’s tariff announcement on April 2 before recovering all that lost ground by month’s end, a reflective Warren Buffett gave some timely investment advice for investors.

During his appearance at the Berkshire Hathaway annual meeting on Saturday, before announcing that he intends to step down as CEO at the end of the year and naming Greg Abel as his preferred successor, Buffett provided sage advice for anyone who could not stop checking their 401(k) during the recent turmoil on Wall Street. “People have emotions,” he said, “but you’ve got to check them at the door when you invest.”

He’s not wrong. For the past month, MarketWatch readers have watched their 401(k)s tumble. As Trump redrew the geopolitical landscape by pledging a wave of tariffs, Wall Street balked. Some readers said they were downsizing, others were buying gold or cashing out completely. Retirees, in particular, were antsy. Many retail investors were panic selling, while others were panic buying — not stocks, necessarily, but coffee, olive oil and soap.

Buffett, on Saturday, talked to a young man who asked about overcoming setbacks. “I would focus on the things that have been good in your life rather than the bad things that happen, because bad things do happen,” Buffett said. “It can often be a wonderful life even with some bad breaks.” That kind of optimism and perspective punctuates his answers: He constantly invokes broader historical perspective, context and longevity. Buffett is the master of get-rich-slow schemes.

He constantly invokes historical context. Buffett is the master of emotionally detached, get-rich-slow schemes.

In addition to his forensic precision, conservative approach and ability to lie in the long grass, his optimistic outlook — like those Coca-Cola commercials of the 1970s — has few limits. Buffett said his investment decisions often depend on the market, interest rates and psychology. “We will make our best deals when people are the most pessimistic,” he said. “I was born in 1930. When I was born, things got much more attractive over the next two years and apparently I didn’t do anything about it.”

Yes, timing matters. He even reflected, humorously, on Baby Buffett’s lack of action. “That was the opportunity of a lifetime and I blew it by, you know, worrying about the kid in the next crib or something,” he said. “But over my lifetime, you know, I’ve had fabulous opportunities sometimes, and they happen because humans are human. I’m fearful of all kinds of things … but I don’t get fearful of things that other people are afraid of.”

He has a 360-degree view on time and space, enough to talk about living through the aftermath of the 1929 stock-market crash from his baby carriage. The market lost 79% of its value then, and took more than two decades to fully recover, or less if you account for deflation, inflation and reinvested dividends. The market experienced a lost decade after the subprime crash of 2008. The latest tumble and recovery took a month; he described it as “really nothing.”

In Buffett’s telling, his fearlessness, emotional detachment and remarkably upbeat outlook hold true even for the price fluctuations of his own company’s stock. “If Berkshire went down 50% next week I would regard that as a fantastic opportunity and it wouldn’t bother me in the least. Most people, they just react differently,” Buffett added. “It’s not that I don’t have emotions, but I don’t have emotions about the prices of stocks.”

Psychological pitfalls

And yet people make their worst decisions when they’re under pressure, feeling angry, fearful and stressed and without even being fully aware that their ability to make a long-term financial calculation is impaired. This recent review of literature on the impact of our emotions on decision-making found that the deadly combination often leads to irrational and, subseqently, very costly choices.

“Emotional biases often lead investors astray affecting their stock selection and trading. These biases can result in suboptimal decisions, hindering portfolio performance,” the researchers wrote. “Strategies like setting clear goals, diversifying portfolios and seeking professional advice can help to enhance investment success.” The challenge is to be mindful of that advice when the going gets tough.

For you and me, and Buffett too, those psychological failings can include herd mentality, making hasty decisions to buy/sell based on what everyone else is doing; overconfidence bias, assuming the good times — an era of low interest rates or rising house prices — will never end, despite what data and anecdotal evidence might be telling you; and loss aversion, being too conservative for fear of losing your investments.

The myriad of mental traps that panicked investors fall into may have been what Buffett was referring to when he talked about how “psychology” plays a role in his company’s earning power by informing his investment decisions. Like a poker player or an alien viewing human behavior from afar, he sees the psychology of the market like any other opportunity to make smart, informed choices that will benefit his shareholders.

Like an alien viewing human behavior from afar, Buffett sees the psychology of the market as an opportunity.

The other unsung heroes of any retail investor’s ability to build wealth over time, and look forward to a comfortable retirement with peace of mind (yes, that’s what patience and compounding gets you), are the support systems you have around you. Buffett talked about that too during his four-and-a-half hour question-and-answer session in Omaha, Neb., on Saturday.  

Your upbringing and your choice in friends will impact your financial future. Add to that your choice of life partner. “Who you associate with is just enormously important,” he said, “and don’t expect you’ll make every decision right on that. You’re going to have your life progress in the general direction of the people that you work with, that you admire, that become your friends.”

Learn from the good people in your life, and curate your circle to include people with qualities like kindness, patience and level-headedness. All of these qualities are good in life and good in finance. “There are people that make you want to be better than you are,” Buffett said, “and you want to hang out with people that are better than you are and that you feel are better than you.”

The truth is, events can overtake us: Great Depressions, Great Recessions, shifting geopolitical alliances, wars, pandemics and whatever may come next. But we are all ultimately responsible for our own lives and, as Buffett pointed out, you can live through all of the above and still come out a winner, if you invest in the long term, treat fear and greed as mortal enemies, and keep your eye on the ball.

The decisions we make, whether or not we keep our heads about us, are ours and ours alone.