World’s most successful investor Warren Buffett has also witnessed the world’s biggest market crashes. But unlike the average investor, he and his riches were not wiped out in those turbulent times.
Infact, he used these market crashes as opportunities to grow his wealth. There are some solid lessons young Indian Investors could get when we dive into what sets Buffett apart from the average Joe in times of market chaos.
#1 Use Both Fear and Greed, But at the Right Time
In 2008, as the global financial crisis caused markets everywhere to crash, Buffett made one of his biggest bets. Wall Street was in a panic, with people rushing to sell, but he put $5 billion into Goldman Sachs. There were other big deal as well ofcourse. In his 2008 shareholder letter, Buffett said, “Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.” This decision ended up earning Berkshire Hathaway more than $3 billion in profit.
More recently, when COVID-19 struck in March 2020, the Sensex dropped from 42,000 to around 25,000 points. Those who used Buffett’s advice and picked solid companies such as HDFC Bank, TCS, and Asian Paints, among many others,at lower prices ended up doubling their money within 18 months. And potentially a lot more if you had held onto the shares. The pandemic crash just like previous ones, turned out to be a chance rather than a final blow.
#2 Pay Attention to Value over Price
“Price is what you pay, value is what you get,” Buffett likes to remind investors. When the dot-com bubble burst between 2000 and 2002, tech stocks took a nosedive. Buffett avoided major losses by sticking to companies he knew well and steering clear of overpriced tech shares.
The same thing happened during the 2008 collapse in India’s stock market. A lot of people invested in overpriced infrastructure and real estate stocks. But investors who applied Buffett’s approach and focused on businesses with strong basics, like Hindustan Unilever or Nestle India in the consumer goods sector, managed to do much better. And that too without taking any unnecessary risk. These stocks did not just protect money—they went on to build significant wealth over the following decade.
#3 The Fat Pitch Opportunities
Buffett often talks about his baseball strategy of holding out for the “fat pitch,” which he sees as the ideal chance to act. This strategy needs a mix of patience and having cash ready to go. Back in 2008, Buffett kept close to $20 billion in cash, which let him grab game-changing deals in companies such as Goldman Sachs and General Electric. By the way, Buffett’s current cash horde is north of US$ 300 bn.
Adapt this to Indian markets, investors should focus on building a fund to use as an opportunity stash. When the IL&FS crisis caused a market dip in 2018, those prepared with cash could grab top-tier NBFCs like Bajaj Finance at bargain rates. These investments have since grown several times in value. Every few years such an opportunity comes by. This only underscores the importance of being liquid at all times to catch the next fat pitch.
#4 Business Over Stocks, Always
In his 1987 letter after Black Monday when markets dropped 22 percent in one day, Buffett told shareholders, “We attempt to be fearful when others are greedy and to be greedy when others are fearful.” Even more than that, he made it clear that Berkshire focused on buying businesses, not chasing stocks.
Indian retail investors can learn a lot from this advice, as they often get caught up in market swings. Take the 2020 crash as an example. Companies like D-Mart showed how Buffett’s strategy works. People who looked at D-Mart as a solid business—with low debt, great inventory control, and a proven way of doing business—instead of just a falling stock, were rewarded when it bounced back and went beyond its pre-crash levels.
#5 Avoid Debt and Focus on Financial Stability
Buffett has cautioned about the risks that come with taking on debt. In his 2010 letter, he said, “When leverage works, it magnifies your gains… But leverage is addictive. Once having profited from its wonders, very few people retreat to more conservative practices.” Crashes often destroy those carrying significant debt.
This is a hard lesson Indian investors know well, having seen the collapse of debt-loaded companies like Jet Airways and DHFL. On the flip side, businesses with solid financials such as Asian Paints and Nestle managed to weather multiple market slumps and still grow. For individuals too, steering clear of personal debt for stock trading has shown to be key during market downturns.
#6 Focus on the Long-Term and Tune Out Market Distractions
Buffett’s biggest teaching might be about staying patient with a long-term view. During the massive market crash of 1973-74—one of the worst ever seen—Buffett stayed steady. The Dow Jones dropped almost 45%, but he kept investing. He once explained that “the market is there as a reference point to see if anybody is offering to do anything foolish.”
Indian investors need to look past the constant buzz from business channels and front-page headlines. Those who held their investments steady during rough patches like 2008, 2013, and 2020 saw the Sensex climb from 8,000 points in 2008 to over 65,000 points by 2023. Trying to time the market or trade for quick gains could never match these kinds of returns.
#7 The Masterclass for Indian Investors
Buffett’s advice works everywhere, but Indian investors deal with some unique issues. Our markets often swing more due to global events outside our influence. The falling rupee adds another challenge, but his core ideas still hold true.
Look at the 2013 “taper tantrum” as an example where foreign investors removed money from emerging markets such as India. The Sensex dropped hard, and the rupee lost a lot of value. People who stuck to Buffett’s advice of sticking with solid companies and buying into them when the markets are gripped with fear—like Asian Paints, Britannia, and Marico—not only kept their money safe but also earned solid returns over the next few years.
Build Wealth the Buffett Way
Warren Buffett’s strategy for market crashes offers useful lessons to Indian investors. By being bold when others panic, focusing on a company’s value instead of just its share price, keeping cash available, thinking about the long game, and staying away from debt, investors in India can use tough market times to create wealth instead of fearing them.
As Buffett said, “The stock market is a device for transferring money from the impatient to the patient.” To build lasting wealth across different market phases Indian investors need patience. It could end up being their best financial advantage.
A market crash is guaranteed to happen—it is not about if, but when. Those who carry Buffett’s advice into uncertain times will not panic. Instead, they might see it as a chance to profit.
The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
Suhel Khan has been a passionate follower of the markets for over a decade. During this period, He was an integral part of a leading Equity Research organisation based in Mumbai as the Head of Sales & Marketing. Presently, he is spending most of his time dissecting the investments and strategies of the Super Investors of India.
Disclosure: The writer and his dependents do not hold the stocks discussed in this article.
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