If a Market Correction Is Coming, Warren Buffett Says This 1 Move Is Key to Building Wealth

The market has seen an uptick in bearish pressure recently, and it's not unreasonable to think that bigger contractions could be on the way. Inflation is proving stubbornly sticky, and dynamics connected to the Iran war could cause energy prices to remain higher for longer and create trickle-down inflationary impacts. As a result, investors, analysts, and economists now believe that it's highly likely that the Federal Reserve will implement at least one more benchmark interest rate hike this year -- and higher rates typically create a less favorable backdrop for the stock market.

Concerns about inflation and higher interest rates aren't the only factors driving fears of a potential market correction as of late. High bond yields are also creating bearish market pressures and making it increasingly expensive to service interest payments on the U.S.'s rapidly expanding national debt. Meanwhile, there are concerns about valuations for artificial intelligence (AI) stocks, which have been the driving force in pushing major indexes higher this year.

With rising fears that a substantial market contraction could be on the horizon, here's one key bit of advice from legendary investor Warren Buffett that could help investors build wealth through volatility.

Warren Buffett. Image source: The Motley Fool.

Warren Buffett's navigation of volatility helped create fortunes

Warren Buffett stepped down as chairman at Berkshire Hathaway (NYSE: BRKA) (NYSE: BRKB) last month after stepping down as the company's CEO at the beginning of the year. While Buffett remains on the company's board of directors, there's no doubt that the famous moneymaker's career is winding down -- and what a career it's been.

To put things in perspective, Berkshire Hathaway stock was valued at roughly $19 per share when Buffett purchased a majority stake in the company and became its CEO in 1965. Today, a single share of the company's class A stock is valued at roughly $798,000.

Over more than six decades at the helm of the investment conglomerate, Buffett executed successfully through market corrections and crashes -- and one core piece of wisdom could provide investors with the foundational grounding needed to build wealth amid volatility. As the Oracle of Omaha famously said, "The stock market is a device for transferring money from the active to the patient."

At its core, this piece of wisdom stresses the importance of not overreacting to market moves and viewing investments as long-term opportunities. Buffett repeatedly advised investors that attempting to time short-term market moves with regularity was virtually impossible, and he also cautioned against trying to time the bottom of a contraction.

Additionally, he also stressed the importance of having funds available to take advantage of opportunities created by pullbacks and of analyzing stocks based on the fundamentals of the underlying companies. Doing so gives investors a better chance to determine whether things have materially changed for a business -- or if pricing swings are mostly just noise.

Keith Noonan 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.