As stock markets around the world are reaching record highs this week, many are turning to Oracle of Omaha Warren Buffett for advice for what to do next.
After all, as of October 2025, Buffett is the world's 11th richest individual with a net worth of around $148.2 billion. Given a key source of his booming wealth is his legendary investment success, Australian investors should take note of his advice.
The S&P/ASX 200 Index (ASX: XJO) reached its highest ever peak of 9,109.70 points in lunchtime trading on Thursday. It closed the day at 9,068.40 points.
The index soared following news of a weaker jobs market after the Australian Bureau of Statistics (ABS) released its latest monthly employment data. It showed that seasonally-adjusted unemployment jumped 0.3% to 4.5% in September, which is the highest level since November 2021.
And now many investors are questioning if the news indicates the ASX 200 is set to end 2025 at an all time high.
The problem is, when valuations reach these sky-high levels, this risk of investing is higher than ever. This is especially the case if investor greed starts to read its ugly head.
Image source: The Motley Fool
Warren Buffett's top tips: Prepare, don't predict
Buffet has always maintained that it is not possible to reliably time the market, especially when it is in chaos or even during unprecedented highs. That's because there are too many moving parts – even the smartest investors can get it terribly wrong.
Instead of trying to predict how the market will act, Buffett urges investors to be prepared. That means being patient, avoiding being caught up in FOMO (the fear of missing out), and keeping some cash at hand so you have options if stock market prices do suddenly drop.
Taking a step back and focusing on preparing takes the edge of volatility. It lets investors differentiate between opportunities and catastrophes.
Warren Buffett's top tips: Pick the business, not the stock
Even when markets are at all-time highs Buffett says he will still look around at his options.
He once famously said in a letter to Berkshire Hathaway shareholders that "Charlie and I are not stock-pickers; we are business-pickers".
The point is, he sees ownership as a way to make a meaningful investment in businesses which have long-lasting favourable economic characteristics and trustworthy managers.
The concept applies whether the market is storming higher or whether it is in freefall. All too often, investors panic and act irrationally. When this happens we see low-quality stocks purchased for high prices or valuable stocks being sold off out of fear.
What I'm doing in 2025
My plan for the remainder of the year is to make sure I've identified high-quality stocks which I think have room for more growth.
I'm really interested in ASX defence stocks like Droneshield Ltd (ASX: DRO) or Electro Optic Systems Hldgs (ASX: EOS) and I think the AI space has a lot of room to run so I'm keeping my eye the likes of Next DC Ltd (ASX: NXT) and Megaport Ltd (ASX: MP1).
I think there is a good chance the ASX 200 Index could end close to, or even surpass, recent highs over the remainder of 2025. I'm not going to act on my emotions but I'll do as Warren Buffett suggests and prepare myself to pounce when I see a great opportunity.
