Why Buffett's Great Advice Is Impossible To Follow

Warren Buffett has this famous quote about investing that gets thrown around a lot: "Be fearful when others are greedy, and greedy when others are fearful." It sounds great and it makes a lot of intuitive sense: there are opportunities to be had when people start selling out of fear, and there are pitfalls to be avoided when people start driving up the stock market in excitement. It's good advice; the problem is that it's so hard to follow.

I think there are two reasons this simple axiom can be hard to implement: 1) when others are fearful, chances are something is going wrong in a big way nationally or even internationally — and you also might be feeling pretty fearful; and 2) the truth is that there are always people who are greedy and always people who are fearful.

Every year since the pandemic, economists have been saying we're overdue for a recession. And they're right. Recessions tend to happen about once every 6 or 7 years, and the U.S. hasn't had a full blown recession in over 15 years. So you would be right to think that a recession is on the horizon, which might make you fearful. (I've written about this before: Another Recession Is Coming. How Should You Prepare?) According to Buffett, that fear is a signal that this might be a time to buy more investments.

And yet, and yet, and yet: the stock market just keeps cranking away, feeling more and more disconnected from how people actually feel about the economy. To use a little industry talk, it's the difference between how people feel on Wall Street versus Main Street. The S&P 500 was up almost 18% last year and about 25% the year before that. So far in 2026, it's up about 7.5% year to date — not bad considering how bad & crazy everything feels. So there are definitely a lot of people feeling greedy, which is a signal, according to Buffett, that smart investors should be fearful and reduce their risk exposure.

So again: there are always people that are fearful and always people that are greedy. Even in the best of times, even in the worst of times.

A number of people have been reaching out to ask about downshifting their mix of investments to something less risky. Because, come on, this shit is bad and getting worse, right? Should we all just cut and run until it feels safer?

I tell everyone the same thing: while there is a very real & understandable temptation to get out of the markets when they seem risky and get back in when they seem safe, the evidence overwhelmingly suggests that it is almost impossible to get the timing right — and that getting it wrong by even a handful of days over a 20 year period will have real negative impact on your overall returns.

If you missed just the 10 best days in the last two decades, you would be meaningfully worse off than if you had changed nothing and kept your investment strategy the same the whole time. And over the last 20 years, the 10 best days have happened right around the 10 worst days. The odds of getting successfully investing on the best days while also avoiding the worst days are a little better than 1 in 1,000, but not by much. (Here are some articles that back that up from CNBC, The Motley Fool, and The Visual Capitalist.)

To put it bluntly: the odds are just so highly stacked against you correctly timing when to get out of the stock market and when to get back in that it's almost impossible to do it right, and being just slightly wrong on the timing will leave you worse off than if you had just kept doing the same thing.

However, if you can be patient and stick to a solid long-term investing strategy, the odds are very much on your side. Over any given year in the past 100ish years, the U.S. stock market has been positive about 69% of the time. If we zoom out to any given 5 year period, the stock market has been positive about 79% of the time. In other words, your odds of making money in the stock market are about 10% higher if you can just wait a few more years. Over 10 year periods, the U.S. stock market was up about 88% of the time, And there has never been a 20-year period where the U.S. stock market was negative.

Compare those two different scenarios I just threw at you: if you miss just the 10 best days in a 20 year period, you will be worse off; and the U.S. stock market has never been negative in any 20-year period. That doesn't mean it can never happen, but it does mean that sticking with a consistent strategy for a long period of time is way more likely to work out than trying to get out of the stock market when it feels scary and back in when it feels safe.

"Sure, Tim," you might think to yourself, "but this time is clearly different. Are you sure it wouldn't be smart get out of the stock market right now, when it feels so risky???"

While it's true that I have no idea what will happen in the stock market this week, this quarter, or this year (no one does), I maintain that finding an investment strategy you can stick with for a very long time is your best path to being a great investor.

That said, if you feel like you’re taking too much risk with your investments right now, this could be an opportunity to discuss downshifting your investment mix to a lower concentration of stocks. Remember that my ultimate goal is not that you find a strategy that is optimized for the most possible growth; it's to match you with an investment mix that you can stick with for a long time. If switching to something less volatile helps you do that, then I’m all for it.

What I don’t want to do, though, is try to anticipate when the market is going up or down and change strategies based on that. There’s no evidence that anyone anywhere is good at trying to time the market (even Warren Buffett, with his pithy advice), but there’s lots of evidence that sticking with a strategy long enough for your investments to compound is a great idea.

Want to have a conversation about the right investment strategy for you? Shoot me an email any time. I'm always happy to talk.

Thanks,

Timothy Iseler, CFP®

Founder & Lead Advisor

Iseler Financial, LLC | Durham NC | (919) 666-7604

Iseler Financial helps creative professionals remove stress while taking control of their financial lives. We'll help identify current your strengths and weaknesses, clarify and refine your long-term goals, and prioritize decisions to improve your financial well-being now and later. Reach out today to take the first step.