I Know That a Bear Market Is Coming Eventually. This Is Warren Buffett's Single Best Piece of Advice for Investors.
Key Points
The stock market is simply volatile.
Expect occasional downturns, because they will happen every few years.
They present great opportunities to buy stocks.
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Is a bear market around the corner? No one can say for sure, but one is certainly coming eventually, and perhaps soon. There are plenty of reasons to expect one. Consider, for example, geopolitical and economic concerns such as tariffs, the war with Iran, volatile oil prices, the threat of inflation (and, therefore, potentially rising interest rates), and even artificial intelligence (AI) and the data centers used to run it.
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Meanwhile, the long-term average annual gain for the S&P 500 is close to 10%. How has it done lately? Check it out:
|
Year |
S&P 500 Return |
|---|---|
|
2019 |
28.9% |
|
2020 |
16.3% |
|
2021 |
26.9% |
|
2022 |
(19.4%) |
|
2023 |
24.2% |
|
2024 |
23.3% |
|
2025 |
16.4% |
|
2026 |
10.2% (through July 14) |
Data source: Yahoo Finance. Yearly figures do not include dividends.
Those are six fat double-digit gains in the past seven full years, and a double-digit gain so far in 2026 through July 14. Sure, the S&P 500 could notch another big (or small) gain by year-end. But it won't surprise me at all if it pulls back soon, with a recession following.
What to do
So what should you do? Well, maybe listen to Warren Buffett, who has said that "bad news is an investor's best friend." That may sound a bit wrong, but remember that bad news in the form of a sharp stock market pullback means that shares of stock in great companies -- ones you may have wanted to own -- will be on sale. It's a great time to buy stocks! So perhaps keep some cash on hand in anticipation. Maybe put aside some cash in case of a recession-related drop in income, too.
Money you won't need for five, if not 10, years shouldn't be invested in stocks. For such money, look at certificates of deposit (CDs), savings accounts, and bonds.
Long-term money is likely to grow well in the stock market, so expect occasional pullbacks and plan to ride them out. They often last just a few months or a few years, though they could last longer.
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When our analyst team has a stock tip, it can pay to listen. After all, Stock Advisor’s total average return is 930%* — a market-crushing outperformance compared to 210% for the S&P 500.
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*Stock Advisor returns as of July 18, 2026.
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