These 5 Warren Buffett Quotes Belong in Your Stock Market Correction Playbook

Warren Buffett regularly provides investing wisdom through his annual letters to Berkshire Hathaway shareholders, his TV interviews, and through the occasional newspaper editorial. And as you might expect from someone who has an outstanding track record of beating the market during stock market downturns, many of Buffett's quotes are excellent advice to use during corrections like the one we're in now.

5 Great Warren Buffett quotes for a stock market correction

Without further delay, here are some great Warren Buffett quotes to keep in mind when the market gets turbulent.

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1. "Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble."

Historically, stocks go up more than they go down. The average bull market since 1932 lasted nearly five years, while the average bear market lasts just 1.5 years. And the sharpest stock market drops last just days or weeks in many cases – just look at the chart of the initial COVID-19 crash:

^SPX data by YCharts

The massive plunge in the 2-day period after President Trump's reciprocal tariff announcement is another example.

One good strategy is to keep some cash on the sidelines so you can pounce on opportunities like these. It can certainly be scary when they're happening, but how many people wish they had bought more stocks in March 2020, or in 2008 when the financial crisis first started?

2. "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price."

This is a Buffett quote that applies regardless of whether we're in a stock market correction or not, but it can be especially apparent during turbulent times why Buffett said it. Great businesses with leading market shares, stable cash flow, and excellent leadership tend to hold up better during market downturns. It's also a smart idea to brush up on some value investing principles that can help you separate the wonderful companies from everything else.

This quote also applies when bargain-seeking during downturns. Buying a tried-and-true market leader at 15% below its high can be a smarter move than buying an unprofitable business for a 30% discount.

3. "Price is what you pay. Value is what you get."

If a stock on your radar is down for no other reason than the overall market or sector is weak, or because of some temporary economic factor like higher interest rates, it can be a great time to buy. But if a stock's price is down because something in its business weakened, it can be wise to stay away.

For example, many of the best-performing stocks of the initial artificial intelligence (AI) boom are now trading for less than half of their recent highs. But it isn't for no reason – it's because we're seeing significant softening in demand for data center space and other AI infrastructure.

In other words, not every stock that is trading for a lower price in a downturn is a true bargain.

4. "Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be a more productive than energy devoted to patching leaks."

It's never a good idea to sell a stock just because it went down. But if a decline in a stock's price is accompanied by a change in your investment thesis, it could be a good idea to sell and move on, not to throw more money at it because it looks cheap. An example in the current market environment might be a stock that could be especially vulnerable to China tariffs. Or if a recession comes, a cyclical business that is highly dependent on discretionary spending could be one to take a closer look at.

Of course, not all stocks that fall in these two categories necessarily need to be sold. But the point is that if your investment thesis is busted, it can be a perfectly good reason to move on – regardless of how cheap a stock looks after a decline.

5. "The most important quality for an investor is temperament, not intellect. You need a temperament that neither derives great pleasure from being with the crowd or against the crowd."

When we see our friends making money hand-over-fist in stocks, it's human nature to want to put all our money in as well. And when everyone else is panicking and selling stocks, it's our instinct to sell before things get any worse. It's common knowledge that the central goal of investing is to buy low and sell high, but our emotions try to make us do the exact opposite.

What Buffett is saying here is to trust your own analysis and research, not what your friends, or some market commentator on TV is telling you to do. By purchasing shares of great businesses at fair prices and holding them for as long as they remain great businesses, stock market corrections are your friend as a long-term investor.

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Matt Frankel has positions in Berkshire Hathaway. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.