The Australian market has been turbulent through the first few months of 2026, suffering a series of crashes and surges. And many might be turning to the Oracle of Omaha, Warren Buffett, for advice on how to invest wisely and still come out ahead.
After all, Warren Buffett spent more than 60 years navigating crashes, recessions, and market volatility to become one of the world's richest people. And all while also building Berkshire Hathaway into an investing powerhouse.
He's doing something right. And with his advice, many other investors could build their wealth too.
Over the years, Warren Buffett has shared several pieces of investing wisdom. But I think these are five of the most important rules when it comes to sharemarket investing.
Image source: Motley Fool Editorial
1. Keep it simple
Warren Buffett isn't a fan of complexity; instead, he has always recommended that investors keep it simple and straightforward.
That means using broad, low-cost index funds rather than investors trying to pick individual stocks. The funds give investors exposure to multiple companies at once. This diversity reduces the risk of significant losses from putting all your eggs into one basket.
2. Stay calm
One of Warren Buffett's most famous philosophies is to "be fearful when others are greedy and greedy when others are fearful".
This means that investors should focus on the long term, rather than the latest news cycle.
Ideally, investors should look to buy high-quality assets at a discount when other investors panic and sell, and pull back or sell when market overconfidence drives share prices to unrealistic heights.
3. Prepare, don't predict
It's not possible to reliably time the market. That's because there are too many moving parts, and even the smartest investors can get it horribly wrong.
Instead of trying to predict how the market will act, Warren Buffett urges investors to be prepared. That means being patient, avoiding being caught up in the fear of missing out, and keeping some cash at hand so you have options if the share price of a business you like suddenly drops.
Taking a step back and focusing on preparing takes the edge off volatility. It lets investors differentiate between opportunities and catastrophes.
4. Pick the business, not the stock
However the sharemarket is tracking, Warren Buffett says he will always look around at his options. And he'll never pick a business that he doesn't understand.
He once famously said in a letter to Berkshire Hathaway shareholders that "Charlie and I are not stock-pickers; we are business-pickers".
He sees ownership as a way to make a meaningful investment in businesses that look to have long-lasting, favourable economic characteristics and are run by trustworthy managers.
The rule applies to investing when the market is storming higher, and also when it is turbulent. The problem is that, often, when a market shifts, investors start to panic and act irrationally. This is when we see low-quality shares bought at above-reasonable prices or good-quality stocks sold off out of fear.
Rather than focusing on the share price, focus on the business itself.
5. Reinvest your dividends
According to Warren Buffett, you should always reinvest dividends if the company is growing and can generate high returns on that capital.
Those extra shares you buy with dividends then start earning their own dividends. Over time, this compounds into much larger returns than if you'd taken the cash.
His logic is simply another way of letting your money make you even more money over time.
