Experts Say a Recession Is Likely. Here's Warren Buffett's Best Advice for Investors.

The stock market has been on a wild ride over the past several weeks. After plunging by nearly 20% between February and April, the S&P 500 (SNPINDEX: ^GSPC) has rallied by more than 13% in the past month, as of this writing.

But with new tariffs now taking effect, many economists are issuing warnings about their impact. Goldman Sachs raised its recession probability to 45% in mid-April, up from 20% just two weeks earlier.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Analysts at J.P. Morgan are more pessimistic, with an estimated 60% probability of a recession beginning in 2025, up from their previous estimate of 40%. Both firms noted that recent tariff policies were the trigger behind the probability hikes.

If a recession is on the horizon, the right strategy can help protect your finances. Legendary investor Warren Buffett has seen many recessions in his 94 years, and this is his best advice for surviving even the worst economic downturns.

Image source: The Motley Fool.

The single best thing investors can do

Some of Buffett's best advice comes from an October 2008 piece he wrote for The New York Times. The U.S. was nearly a year into the Great Recession at the time, which was the most severe economic downturn post-WWII. Many investors were feeling hopeless, and Buffett aimed to inspire some optimism.

"A simple rule dictates my buying," he writes. "Be fearful when others are greedy, and be greedy when others are fearful."

He went on to explain that while weak businesses will struggle to recover from the recession, there's no reason to worry about the future of strong companies. "These businesses will indeed suffer earnings hiccups, as they always have," he says. "But most major companies will be setting new profit records 5, 10 and 20 years from now."

Buffett's prediction came true, as the S&P 500 soared by more than 300% between 2009 and 2019. Those who reaped the biggest rewards? The "greedy" investors who continued buying throughout the market's lowest points.

^SPX data by YCharts

Perhaps the best thing investors can do right now is continue investing -- even when things get rough.

After Buffett's Times piece was published, the S&P 500 fell by another 29% before finally reaching its lowest point in early 2009. But it did recover, and those who stayed in the market saw outstanding returns.

Keep in mind, too, that the S&P 500 did not officially enter a bull market and reach a new all-time high until close to 2014. Between 2014 and 2019, the index saw total returns of around 48%. While that's still impressive, those who had waited until it was "safer" to invest would have only seen a fraction of the earnings compared to those who bought while the market was in a free fall.

^SPX data by YCharts

"You might think it would have been impossible for an investor to lose money during a century marked by such an extraordinary gain," Buffett says of the stock market's history. "But some investors did. The hapless ones bought stocks only when they felt comfort in doing so and then proceeded to sell when the headlines made them queasy."

Where to invest right now

The key to surviving a recession is not only investing throughout the rough patches, but buying the right companies, too. As Buffett mentioned, weak companies will struggle during periods of instability. But strong businesses -- despite facing short-term volatility -- will almost certainly experience long-term growth.

The companies best positioned to pull through a recession are those with strong foundations. That includes everything from a competitive advantage over its peers to an experienced leadership team to a healthy financial bottom line.

Now more than ever, it's important to look beyond stock price when deciding where to invest. Even the strongest companies may see their stock prices plummet during a recession. But if their fundamentals are solid, they'll rebound. By doing your research before you buy, you can rest easier knowing your portfolio is far more likely to recover.

The short-term future of the stock market may be rocky, but its long-term potential is still extraordinarily bright. By taking Buffett's advice to "be greedy" in times like these, you can not only survive any upcoming recession, but also set yourself up for potentially life-changing gains during the recovery period.

Should you invest $1,000 in S&P 500 Index right now?

Before you buy stock in S&P 500 Index, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and S&P 500 Index wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $613,546!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $695,897!*

Now, it’s worth noting Stock Advisor’s total average return is 893% — a market-crushing outperformance compared to 162% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of May 5, 2025

Katie Brockman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.