Buffett’s “build arks, don’t predict rain” advice is to prepare for downturns rather than try to time them. The article reports no immediate signs of an approaching crash and suggests younger adults save at least three months’ expenses, while families may want at least six.
The article revisits Buffett’s advice after his announcement this month that he would step down as Berkshire Hathaway chairman after more than 60 years at the company. It says an emergency fund can help investors avoid selling stocks to cover expenses, potentially at a loss or with capital-gains taxes, and notes that each household’s needs vary.
The article says investors who stayed invested benefited from market recoveries, citing seven S&P 500 “true crashes” since 1980 and a gain of more than 7,000% over that period. It also presents sell-offs as possible opportunities to buy quality stocks at lower prices, echoing Buffett’s advice to be “fearful when others are greedy, and greedy when others are fearful.”
