Last week the S&P 500 touched down into correction territory. The large and mega cap stocks within the technology and consumer discretionary sectors have heralded the recent free fall. Investors were given some reprieve on Friday as the bell weather index ticked up, resulting in the best trading day of 2025.
A correction occurs when an index plummets 10% but less than 20% in a short period of time from its recent peak. Tariff uncertainties and a looming trade war are putting markets into a tailspin. Corporations and consumers are preparing for a recession, and we’re seeing that get priced into the stock market.
For long-term investors seeking undervalued stocks, who have some cash on the sidelines, this a great time to be “greedy when everyone else is fearful” according to Warren Buffet who sold off Berkshire’s S&P 500 ETF holdings at the end of last year, stockpiling cash on top of the $80 billion dollars of AAPL shares he sold in 2024. All in all, Berkshire is sitting on $325 billion in cash and equivalents.
Did the “Oracle of Omaha” make a course correction so he could ultimately buy up companies selling at a deep discount?
Even if you’re not in the best cash position to scoop up stocks on sale, the key is to avoid exiting the market if possible. Being out of the market is actually a greater risk than being in the market assuming you don’t readily need the cash.
Let me illustrate. Investing $10,000 in the S&P 500 from 2003 to 2022 would have yielded you around $65,000. But if you missed the 10 best trading days because you got out at some point, then your money would be less than half at around $30,000.
It gets crazier. Missing 30 of the best days, brings you down to $12,000. And missing 60 of the best days out of the 5,000 trading days would leave you with around $4,000 versus your initial $10,000 investment 20 years prior. Think about that.
The lesson here is to stay the course and stay in the market while smartly picking stocks just like Warren Buffet. And of course you can use daily insights and weekly analytics provided by UVstocks to help you along your journey.
“The ability to keep control and stay calm during market volatility is what separates good investors from the great ones.” — Morgan Housel
P.S. I'm sharing some investment information, but it's important to remember that what I'm providing is for informational purposes only and should not be construed as financial advice.
Happy Investing,
John
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