This Is Warren Buffett's Golden Advice About Investing During a Recession

The U.S. isn't in a recession right now, but many investors are worried we're headed there.

Goldman Sachs lifted its recession odds to 30% this week, up from its earlier estimate of 25%. Other economists are more pessimistic, with Moody's predicting a 49% chance the U.S. will enter a recession in the next 12 months.

This uncertainty around the future is unnerving, but it can sometimes be helpful to look to the experts for their strategies. And if there's one investor who has seen his fair share of recessions, it's Warren Buffett. Here's his golden piece of advice about investing when times are tough.

Image source: The Motley Fool.

Recessions offer a major silver lining to investors

In 2008, at the height of the Great Recession, Buffett contributed an opinion piece to The New York Times to help reassure discouraged investors. The S&P 500 had already lost nearly half of its value at the time, and many Americans were struggling to stay optimistic.

In the article, Buffett offered what is now known as one of his most famous pieces of advice: "A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful."

He went on to note that despite all of the volatility the market has experienced over the past century, it's still managed to thrive over time. By investing during the slumps, you can set yourself up for significant long-term gains.

"In short, bad news is an investor's best friend," Buffett explained. "It lets you buy a slice of America's future at a marked-down price."

Right now could be a lucrative time to buy

If we face a recession -- which, again, is still a big if -- stock prices could fall substantially. As Buffett said, though, that creates a lucrative buying opportunity for investors to load up on quality stocks at much lower prices.

The market has surged over the past several years, with many stocks reaching one record high after another. That's great news for those who have already invested, but it also makes it an incredibly expensive time to buy more stocks.

For example, say you're investing in the Vanguard S&P 500 ETF (NYSEMKT: VOO) -- which tracks the S&P 500 index. Five years ago, that investment cost around $359 per share. But because the S&P 500 has soared since then, that same ETF now costs just over $600 per share.

Again, that's a positive for those who invested years ago and are now reaping the rewards, but it can be prohibitively expensive for those looking to invest on a budget. If we face a recession and prices fall, that's a golden opportunity to snag normally high-priced investments at steep discounts.

Now, this doesn't necessarily mean you have to wait until a recession to buy. We may not even face a recession in 2026, and the longer you wait to invest, the more valuable time you're giving up to allow your money to grow.

However, if you're considering avoiding the market because prices are dropping, you could be missing out on more than you think.

Katie Brockman has positions in Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.