PalmAhBeng Toygraphy

Warren Buffett: “There’s no need to panic even if a stock falls 50%.” Investor: “If a stock drops 50%, what should I do?” Buffett: “First, you need to understand what a stock is.” Investor: “What do you mean?” Buffett: “If you buy stocks, you must be prepared for the possibility that they could fall more than 50%.” Investor: “But my wealth would be cut in half.” Buffett: “That’s right.” Investor: “Wouldn’t that normally scare you and make you want to sell?” Buffett: “In fact, Berkshire shares have also fallen around 50% on three occasions in the past.” Investor: “Even Buffett’s own company?” Buffett: “Yes.” Investor: “And was the company still well managed during those periods?” Buffett: “There was nothing wrong with the business itself.” Investor: “Then why did the stock price collapse?” Buffett: “Because a stock’s price and the value of the business don’t always move together.” Investor: “Still, those declines are frightening.” Buffett: “That’s why you shouldn’t buy stocks with borrowed money.” Investor: “Why?” Buffett: “Because when the price falls, you won’t be able to withstand it.” Investor: “Then when should you buy?” Buffett: “Nobody can pinpoint the exact bottom. Nobody.” Investor: “So buying today doesn’t guarantee it’s the right decision either?” Buffett: “Of course.” Investor: “And you still invest?” Buffett: “Because I think long term, over 20 or 30 years.” This is something every investor should consider at least once. Of course, it doesn’t mean you should hold every stock no matter what. If a company’s results or prospects deteriorate, you should consider selling. However, many people sell hastily simply because the price has fallen. The hardest part of investing isn’t buying at the bottom or selling at the top. It’s being able to calmly evaluate the business you’ve put your trust in, even when the market is turbulent. I believe it’s precisely during a market crash that an investor’s true mindset is put to the test.