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How Warren Buffett sees the stock market, 1900-2020

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Even investors who got into the market at the absolute top of the tech bubble have enjoyed huge gains over the last decade-plus as long as they kept their head down, stayed calm, and stuck to a consistent investment plan. 

Back in October 2008, at the absolute height of the financial crisis, Berkshire Hathaway CEO Warren Buffett wrote an op-ed in the New York Times telling the country to do just that — stay calm.

Buffett wrote that he had been buying American stocks during the recent panic, and he urged people worried about markets to take a long view, writing:

A little history here: During the Depression, the Dow hit its low, 41, on July 8, 1932. Economic conditions, though, kept deteriorating until Franklin D. Roosevelt took office in March 1933. By that time, the market had already advanced 30 percent. Or think back to the early days of World War II, when things were going badly for the United States in Europe and the Pacific. The market hit bottom in April 1942, well before Allied fortunes turned. Again, in the early 1980s, the time to buy stocks was when inflation raged and the economy was in the tank. In short, bad news is an investor’s best friend. It lets you buy a slice of America’s future at a marked-down price.

Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.

From the point Buffett was writing in October 2008, the Dow, S&P 500, and Nasdaq all fell at least another 20%. 

Today, however, these averages are back at or near all-time highs.

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