Buffett told investors in his 1986 Berkshire Hathaway shareholder letter to "be fearful when others are greedy and to be greedy only when others are fearful." He restated this strategy in a 2008 op-ed for The New York Times titled "Buy American. I Am." as the Great Recession deepened.
The advice does not mean making risky bets or going all-in on single stocks. Instead, it means avoiding panic selling when stock prices fall. Buffett himself sells shares when company fundamentals change, but not simply because a stock's value drops temporarily.
Timing matters. The S&P 500 peaked in October 2007, then fell almost 60% by March 2009. Buffett's op-ed appeared during this decline, and investors who followed his advice still watched portfolios drop for several more months before the recovery began in March 2013, nearly six years after the peak.
Investors who maintained long-term conviction and continued buying during the downturn were rewarded when markets recovered. The strategy works best for money not needed for at least five years.
When markets fall, avoid checking portfolios constantly and stick to your investment plan based on fundamentals and your risk tolerance. Rebalance regularly but do not move in and out of positions due to panic. If you need cash soon, build an emergency savings account instead of selling assets.