Worried About the Stock Market? Here's Warren Buffett's Advice.

Investing is fun when stocks go up. But "fun" isn't the description most people would use when their stocks decline sharply. I suspect other words are more appropriate for many investors during the recent market downturn -- maybe "concerning," "nerve-wracking," or even "upsetting."

Worried about the stock market? What should you do amid significant volatility? Here's Warren Buffett's advice.

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Sheer poetry

Buffett bought his first stock at age 11. He's now 94 years old. It's accurate to say that Buffett has lived through plenty of market corrections, pullbacks, and bear markets. Quite a few have occurred since he gained control of Berkshire Hathaway in 1965.

The legendary investor mentioned some of Berkshire's steep downturns in his 2017 letter to the company's shareholders. He pointed out four steep sell-offs of 37% or more. Berkshire's share price plunged 59.1% in one case between March 1973 and January 1975.

Buffett knew then (and now) that such downturns come with the territory when investing. He said other major declines would come, warning, "No one can tell you when these will happen. The light can at any time go from green to red without pausing at yellow."

However, the "Oracle of Omaha" noted that these declines "offer extraordinary opportunities to those who are not handicapped by debt." Buffett recommended that investors heed the advice given in Rudyard Kipling's poem "If":

If you can keep your head when all about you are losing theirs ...

If you can wait and not be tired by waiting ...

If you can think -- and not make thoughts your aim ...

If you can trust yourself when all men doubt you ...

Yours is the Earth and everything that's in it.

Following his own advice

Throughout his career, Buffett has followed the advice he gave in the 2017 Berkshire Hathaway shareholder letter. During those four sharp sell-offs of Berkshire he mentioned, he never panicked. Instead, Buffett stayed the course. If he hadn't, his net worth almost certainly wouldn't stand at roughly $163 billion today.

During the market meltdown in 2008, Buffett wrote an op-ed for The New York Times. He acknowledged, "The financial world is a mess, both in the United States and abroad." However, Buffett believed the market sell-off presented a great opportunity to buy stocks at a discount.

In that op-ed, Buffett explained, "A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful." He predicted, "[M]ost major companies will be setting new profit records 5, 10, and 20 years from now." Buffett was later proven right.

Much of Buffett's success through the years can be attributed to his heeding the wisdom of Kipling's poem. He kept his head while others panicked. He waited. And he trusted his approach of buying stocks when he could reasonably estimate their future earnings and when their valuations were attractive relative to those estimates.

Applying Buffett's advice today

The current stock market downturn pales in comparison to some of the massive sell-offs Buffett has navigated during his long career. However, his advice (or, more accurately, Kipling's advice) remains relevant today.

First, stay calm. That doesn't mean you should ignore what's going on or unthinkingly hold on to stocks that are no longer good picks. But don't make rash decisions without carefully considering the best course of action.

It's also important to remain patient. The stock market will bounce back sooner or later. The saying "time in the market beats timing the market" might sound cliché, but it's true.

Following this advice probably won't make the Earth and everything in it yours, as Buffett and Kipling wrote. However, it should increase your likelihood of making money and making investing fun again.

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Keith Speights has positions in Berkshire Hathaway. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.