The Market’s Folly: A Comedy in Shares

by

Warren Buffett

The stage is set, dear readers, and the players are, as ever, consumed by a most peculiar drama: the valuation of air. Or, to be precise, the valuation of promises, hopes, and the occasional actual enterprise. The indices, that fickle barometer of collective fancy, have of late exhibited a stillness that breeds not calm, but a nervous anticipation. As of this writing, the S&P 500 (^GSPC +0.77%) has merely held its ground this year, a feat akin to a dancer maintaining balance on a most unsteady floor.

A considerable portion of our investing public—some 37%, if the latest surveys are to be believed—now anticipate a decline. A most curious sentiment, is it not? To fear prosperity, to predict ruin where, for a decade past, only gains have blossomed! It is as if they expect the sun to suddenly take offense at their good fortune and withdraw its warmth. The optimists, alas, number only a modest 34%—a pitifully small chorus of cheer in a theatre rapidly filling with apprehension.

And so, the question arises: should one divest, to secure what gains remain? To sell whilst the applause still echoes? It is a tempting notion, certainly. But allow me to present the counsel of a seasoned player, one Warren Buffett, a gentleman who has witnessed more market comedies and tragedies than most. He offers, not a solution, but a perspective – a reminder that the play, despite its momentary lulls, continues.

A Long View from the Upper Boxes

Mr. Buffett, a man of 95 years, has seen empires rise and fall, bubbles inflate and burst. He recalls, with a dry wit, the turmoil of 2008, when the very foundations of finance seemed to tremble. It was then, amidst the general panic, that he penned a missive to the anxious, a plea for reason amidst the hysteria.

He cautioned against fixating on the ephemeral, the fleeting anxieties of the moment. “To be sure,” he wrote, “investors are right to be wary of highly leveraged entities or businesses in weak competitive positions.” A most sensible observation! But to fear the long-term prosperity of sound companies? To believe that the engine of American enterprise will suddenly sputter and fail? It is, he suggests, a folly born of short-sightedness.

Consider the evidence. Since that October of ’08, the S&P 500 has surged – a staggering 621% increase! A most convincing demonstration, wouldn’t you agree, that patience, coupled with prudent investment, can yield rewards far exceeding the anxieties of the hour? To continue to invest, even when the shadows lengthen, is, in Mr. Buffett’s view, one of the most reliable paths to accumulating wealth.

S&P 500 Chart

“Over the long term,” he continued, “the stock market news will be good.” He reminds us that the United States has weathered wars, depressions, oil shocks, and even the occasional disgraced president, and yet the Dow Jones Industrial Average has risen from a humble 66 to a rather impressive 11,497. “You might think it would have been impossible for an investor to lose money during a century marked by such an extraordinary gain,” he notes, with a touch of irony. “But some investors did.”

Alas, these hapless souls succumbed to the temptation of timing the market—buying when comforted, selling when frightened. A most predictable, and predictably disastrous, course of action. It is, one might say, the very definition of financial folly.

The Importance of Solid Foundations

Shaky enterprises, those built on speculation and vanity, are, of course, vulnerable to the whims of fortune. They may flourish briefly, but they are ill-equipped to withstand the inevitable storms. It is therefore paramount, dear readers, to invest only in companies with solid foundations—robust financial records, competent leadership, and a competitive advantage.

Some industries, naturally, are more resilient than others. And a strong competitive position provides a most welcome buffer against the turbulence of the market. But above all, a long-term perspective is essential. By loading up on quality stocks and riding out the storms, one can, over time, accumulate a fortune far exceeding the anxieties of the moment.

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2026-02-25 16:02