Warren Buffett's Best Stock Market Investment Advice for Right Now

Warren Buffett may have stepped down as Berkshire Hathaway's CEO at the end of 2025, but his investing wisdom will live on forever.

One of my favorite quotes came in his 2022 letter to Berkshire Hathaway shareholders. He said:

"Despite our citizens' penchant – almost enthusiasm – for self-criticism and self-doubt, I have yet to see a time when it made sense to make a long-term bet against America. And I doubt very much that any reader of this letter will have a different experience in the future."

Given how well the S&P 500 (SNPINDEX: ^GSPC) has performed over the past decade and how much money has flowed into S&P 500 index funds, it seems unlikely we'll see a wave of anti-U.S. stock market sentiment anytime soon. Over the long term, that's probably for the best.

The near term, however, presents an interesting challenge. Valuations are high, the war in Iran is creating complications for oil prices and inflation, and foreign trade partners are more interested in reducing their reliance on the United States.

But when short-term conditions look problematic, it's probably best to revisit some of Buffett's other advice for investors.

Source: Getty Images.

Key takeaways

• Buffett has repeatedly told investors to buy and hold a low-cost S&P 500 index fund rather than try to pick individual stocks.
• Fidelity notes that since 1980, the S&P 500 has experienced a 5%+ decline in 93% of calendar years and a 10%+ decline in 48% of calendar years.
• Warren Buffett said in a 2013 letter to Berkshire Hathaway shareholders that he recommends Vanguard's S&P 500 index fund.

Buffett's endorsement for buy-and-hold

Many Buffett quotes involve the same theme of long-term buy-and-hold.

In his 2020 shareholder letter, Buffett said: "Despite some severe interruptions, our country's economic progress has been breathtaking."

That could be interpreted as Buffett suggesting investors should stick with U.S. stocks instead of diversifying overseas. That would be fair. I interpret it as Buffett's endorsement for holding investments indefinitely.

The statement about "severe interruptions" essentially says that the market will go up and down over time. Sometimes, it will go down severely. But the "economic progress has been breathtaking" piece of that quote tells people to pull back the lens and look at how far the U.S. economy has come over the course of decades.

Fidelity notes that a 5% decline in the S&P 500 occurs almost every year. A 10% decline happens in almost half of them. The U.S. has experienced the Great Depression, the financial crisis, stagflation in the '70s, the tech wreck of 2000, and the COVID pandemic. Despite all this, the economy continues to expand, and the S&P 500 continues to set new all-time highs.

Stick with a low-cost S&P 500 index fund

Many people already know that Buffett has told people to just invest in the S&P 500 and let it grow over time. What you might not realize is how specific he got in what that investment should look like.

In his 2013 Berkshire Hathaway letter, Buffett says: "Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard's.)"

He was referring to the instructions he left for his estate planner with regard to what he's going to leave his wife after his passing. But it's advice that can apply to almost anyone. Investing doesn't have to be complicated. You don't need to own dozens of stocks or funds. If you simply invest in large-cap U.S. stocks via the Vanguard S&P 500 ETF (NYSEMKT: VOO) and Treasury bills for liquidity, you can do just fine over the long term.

It's easy to get distracted with what's happening right now. Buffett has also said that long-term buy-and-hold investing is the better way to go. He has said it for decades.

This would be a good time to heed some of that advice.

David Dierking has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.