Quote of the Day by Warren Buffett: ‘Bad news is an investor’s best friend. It lets you…’

Berkshire Hathaway founder and Chairman, Warren Buffett is known for his wealth of investment advice over the years. A few such pointers making the rounds on social media include Buffett's emphasis on keeping things simple, weighing the pros and cons, and holding on to stocks to see benefits instead of selling at the first spike.

Quote of the day by Warren Buffett

“Bad news is an investor's best friend. It lets you buy at a marked-down price.”

What does Warren Buffett's statement likely mean?

Among the major investment advice that Warren Buffett has shared over the years includes, “buying at the right price”. The above quote is from his 2008 op-ed for the New York Times (NYT) where he noted that market downturns make otherwise expensive stocks more reachable and reasonably priced.

According to Buffett, if you are confident of the company's fundamentals, a market crash provides you with an opportunity to take a piece of the pie that would have been too expensive. It's a matter of grabbing opportunities while being prepared and informed enough to make a quick decision, when the window opens.

Buffett's mantra on rare big opportunities is to sieze the moment. “Big opportunities in life have to be seized. When we get the chance to do something that’s right and big, we’ve got to do it,” not doing so, “is just as big of a mistake”, he told students in 2001 at the University of Georgia's Terry College of Business.

On how to analyse which companies might be right for you, Buffett often suggests investing in the stocks of companies which have an “economic moat” around them or companies with a strong competitive advantage and growth prospects in the long run.

He also believes in ignoring the noise and making objective decisions instead of blindly following the market. In the same 2008 NYT op-ed, Buffet noted that good companies will continue to set records, regardless of market ups and downs. “Fears regarding the long-term prosperity of the nation’s many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records five, 10 and 20 years from now,” he wrote.

Who is Warren Buffett, aka ‘Oracle of Omaha’

Warren Buffett, alongside friend and business partner Charlie Munger were the architects who over nearly 60 years transformed Berkshire Hathaway Inc. from a failing textile maker into an empire, worth billions. Decades of compounded returns made the pair billionaires and folk heroes to adoring investors.

Notably, in January this year, Buffett handed over the reins and CEO position to successor Greg Abel. But his “bull run” with Berkshire has been legendary — gaining more than 55,00,000% returns over 60 years (1964-2024), to building the group to $1.2 trillion, and expanding Class A shares to worth $167 billion.

Known as the ‘Oracle of Omaha’ for his uncanny prediction on stocks, Buffett gained fame and investor confidence for handpicking companies (Apple, Bank of America, Coca-Cola, etc.) that exploded and now account for 70% of Berkshire's $263 billion stock portfolio. He termed this as “one wonderful business can offset the many mediocre decisions that are inevitable”.

Buffett's net worth is estimated at $152 billion, making him the 10th richest person in the world, according to the Bloomberg Billionaire Index.