Warren Buffett is known for many famous investing quotes.
"Be fearful when others are greedy, and be greedy when others are fearful" might be especially appropriate for the current environment.
Buffett is the world's most famous long-term buy-and-hold investor. He'd probably urge investors to exercise some caution here.
Legendary investor Warren Buffett has given investors numerous memorable quotes over the years. One in particular might be especially relevant today, given the stock market's recent performance.
The S&P 500 (SNPINDEX: ^GSPC) is on pace for its fourth consecutive year of double-digit returns. Tech stocks have done even better, thanks to the artificial intelligence (AI) boom. The iShares Semiconductor ETF (NASDAQ: SOXX) is up 116% year to date and more than 300% over the past three years.
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Bullish sentiment is high right now, but Buffett would probably encourage investors to tap the brakes a bit on their expectations.
He has famously said, "Be fearful when others are greedy, and be greedy when others are fearful."
Source: Getty Images.
Human nature often pushes investors to do the opposite. They'll continue buying even as valuations get stretched and sell after prices have already gone down. Buffett's 13-word quote is an endorsement of a very simple investing principle: Buy low and sell high.
Buffett is about as much of a long-term buy-and-hold investor as you'll find, so I doubt he'd suggest that people should be selling right now. But he'd almost certainly be telling investors to take stock of current conditions and not get caught up in a wave of enthusiasm.
When greed takes over the markets, caution is usually the wiser course of action. It's a lesson that investors should keep in mind right now.
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David Dierking has positions in iShares Trust-iShares Semiconductor ETF. The Motley Fool has positions in and recommends iShares Trust-iShares Semiconductor ETF. The Motley Fool has a disclosure policy.