If a Bear Market Is Coming, History Says Warren Buffett's Proven Strategy Is Key

Warren Buffett, the former CEO of Berkshire Hathaway (NYSE: BRKA)(NYSE: BRKB), never gave specific investment advice. He preferred to provide guidance in broader terms and, usually, with a folksy flair. For example, "our favorite holding period is forever" is just another way of saying buy and hold for the long term. But when you pair that quote with another one, it really cements the wisdom that the next bear market shouldn't worry you. Here's the quote and how to apply it to your investment approach.

Buffett offers big-picture advice

While Warren Buffett had his own way of investing, he never explicitly laid out what he did. Instead, he provided a broad explanation. To summarize, Buffett's investment approach boils down to buying good businesses at attractive prices and holding them for the long term. The real goal is to benefit from a company's growth over time.

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That's where the favorite holding period quote comes from. But step back and think about the approach for a second. It could be applied to a growth, value, or dividend investment style. You just have to make sure you buy companies you believe are well-run and pay a price you believe is reasonable. Then hold for the long term, which inherently means owning through bear markets, since downturns are a normal part of investing.

This is the Buffett quote to keep in mind today

The stock market remains near all-time highs despite geopolitical conflicts, elevated inflation, and many other very legitimate concerns. Investors are worried that a downturn could be on the way, perhaps precipitated by the collapse of the AI investment bubble. Which is why you need to read this Buffett quote:

I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.

That may seem a bit nonsensical at first, since buying stock inherently means you are attempting to make money on the stock market. But Buffett is really explaining his long-term focus. Simply put, he doesn't care about the near term because he's really trying to benefit from the long-term growth of the businesses he buys. As long as the business he's invested in continues to perform well, the stock price isn't a concern. In fact, it may not even be worth looking at.

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OK, that may be taking things a bit too far. However, it fits well with the teachings of Buffett's mentor, Benjamin Graham. He often described Wall Street as a voting machine in the short term and a weighing machine over the long term. In other words, investor emotions will drive near-term volatility in stock prices, but a business's fundamentals will dictate the price over the long term. If you focus on the business, you don't have to worry as much about the stock price, even during market downturns.

The proof is the long-term performance of the S&P 500

Buffett's highly successful track record as an investor should be proof enough that he's worth listening to. However, there's another bit of proof worth examining: the S&P 500 index. The chart above shows that the market has historically recovered from deep bear markets and gone on to even higher highs. And that means that, if you follow Buffett's buy-and-hold advice, even buying at a market top is likely to work out well if you can hold on for long enough. So do everything you can to avoid selling out of fear when the next bear market comes along, and instead keep sticking to your long-term investment approach.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.