When other stock market investors panic, here’s what Warren Buffett does instead

Warren Buffett said he bought his first stock at the age of 11, which means he’s been investing for 81 years. If that’s not the definition of long-term investing, I don’t know what is.

With those 81 years comes an incredible amount of wisdom, leading the investment community to often turn to Buffett in times of danger, simply because he was an investor in the worst of the market. In fact, over the course of Buffett’s investment career, he experienced 12 recessions and nine bear markets. So, it goes without saying, the current market environment is nothing new to the Oracle of Omaha.

With so much experience with market volatility, Warren Buffett’s investment activity during past bear markets can offer some insight.

Warren goes on the offensive

A study of Buffett’s investing activity shows that he is quite conservative when stocks are rising quickly, but strategically aggressive when prices are falling – and Berkshire Hathaway‘s (NYSE: BRK.A) Acquisitions in recent bear markets confirm this.

Data source: Berkshire Hathaway filings.

If you’re curious about how these acquisitions look relative to Berkshire Hathaway’s stock price, consider the chart below.

BRK.A data by YCharts.

Berkshire Hathaway’s acquisitions during market downturns show that while the market is in a panic, Buffett usually loads up on his elephant gun. This is without taking into account the stock purchases made by the company during those bear markets. While there is certainly more to his success as an investor, his ability to make balanced decisions when the market does the opposite is a big reason why he is considered the greatest investor of all time.

Buffett keeps his focus for the long haul

Panic selling is a side effect of short-term focus on the part of investors. With the exceptions of investors who are about to retire or those who are in dire need of cash, there is no good reason to sell high-quality stocks that have been battered simply by macroeconomic factors beyond the companies’ control. However, every five years or so, this is exactly what countless investors do when the market turns bearish.

However, it is safe to say that Warren Buffett is not one of them. This quote from the CEO of Berkshire Hathaway sums up the mindset all long-term investors should strive to emulate:

In the long run, the stock market news will be good. In the twentieth century, the United States suffered two world wars and other painful and costly military conflicts. Depression scores of recessions and financial panics; Oil shocks, a fly epidemic and the resignation of a humiliating head. However, the Dow Jones rose from 66 to 11497.

The next time you hear someone telling you to get out of the market because something scary is happening in the world, go back and re-read this quote.

Ignore the noise and stay on track

Warren Buffett is the greatest investor of our generation, and for good reason. He has been investing for 81 years and has consistently profited from panic selling by buying assets at deeply discounted rates. If you do these two things, there is nothing else you need to worry about.