$16 trillion ‘wiped off’ share markets. Buffett doesn’t care

Why is the world’s greatest investor buying when many are selling?

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Do you remember when you, or perhaps your son or daughter, were learning to drive?

When you ‘got your Ls’, suddenly you noticed all of the other learner drivers on the road, right?

Or when you or a partner was pregnant, you saw pregnant women everywhere?

Maybe when you bought a car, you suddenly realised how many others of the same model were on the road?

Of course, there wasn’t really a spate of new drivers, or newly pregnant women. There wasn’t a sudden surge in sales for the same model of car you now owned.

It’s just that our brains are wired to recognise similarities between us and others.

I’m no evolutionary biologist, but you can see why. Creating those connections strengthens bonds between people – an important building block in the creation of communities and societies that helped us advance as a species.

The same is true of investing.

Apparently, the world’s stock markets have lost $16 trillion in value (yes, with a T) since the most recent peak.

The falls have been rough on many of us.

It seems everywhere you look, there are stories of losses.

At least we’re in it together, I guess.

But that’s the other thing: those stories sell because humans respond viscerally to bad news.

‘If it bleeds, it leads’ is the newspaper maxim.

So not only is bad news likely to be more prominently reported, but we’re more likely to notice and to internalise that bad news when we can associate with it.

So you might not have noticed – or if you did, you almost certainly wouldn’t have given it the same weight – the stories about Warren Buffett, recently.

While the headlines are about bear markets in technology stocks, or crashing Bitcoin (CRYPTO: BTC) (that’s a whole other article), and the market is truly losing significant value, there are other stories, like Buffett’s.

Turns out, Buffett has been buying.

And not just buying, but BUYING.

He’s apparently invested $74 billion in the past couple of months.

Which is big.

And deserving of more headlines than it’s received.

Because Buffett knows what the rest of us need to remember – that when the news is full of ‘what just happened’, and when we are tempted to think in terms of extrapolation, rather than cycles – buying when others are fearful is usually a very smart option.

Let me put it in starker terms:

Right now, many people are selling in fear.

Some are holding onto cash, trying to avoid the pain of loss.

And the world’s greatest investor is buying.

Now, maybe, this time, after more than 55 years running Berkshire Hathaway Inc. (NYSE: BRK.A) (NYSE: BRK.B)

Maybe, after countless headlines, over decades, wrongly wondered if Buffett was old hat…

Maybe, possibly, there’s a chance that he’s making a huge mistake.

But if Buffett is buying, while others are selling, or frozen in fear…

Isn’t there a chance we should spend less time contemplating our losses, and a little more time emulating the man who has spent decades demonstrating the value of long-term investing?

You think there might be a pretty bloody good chance?

Yep, me too.

I can’t offer to make the losses hurt less. I can’t stop the worry. I can’t make the market turn around, by force of will.

But I – like you – can hold my nose, and buy anyway with eyes set firmly on the horizon, and believe in the long-term potential of investing, just as Warren Buffett has… for decades.

Or, you can be like the ‘smart money’ and try to time the market, guess at macro forecasts, trade in and out, check your brokerage a dozen times a day and let the noise overwhelm you.

I don’t know about you, but I’m with Uncle Warren.

Join me?

Fool on!

Motley Fool contributor Scott Phillips has positions in Berkshire Hathaway (B shares). The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Berkshire Hathaway (B shares) and Bitcoin. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), short January 2023 $200 puts on Berkshire Hathaway (B shares), and short January 2023 $265 calls on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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