Broad-based market sell-offs are often great times to initiate long-term investing positions. In fact, they can give investors just the nudge they needed to buy stocks that already looked like great values before the market declined.
Tariffs and talk of a recession have been making major headlines this week, and the market is reacting with predictable volatility. The Nasdaq Composite (^IXIC -0.18%), which features a riskier, tech-loaded group of stocks, is in correction territory, 13% off its recent highs as of this writing.
There's nothing particularly magical about a 10% drop in a stock market index. It is just a number, like any other.
Artificial intelligence (AI) stocks have sold off heavily over the past few weeks, with Nvidia (NVDA 1.66%) being one of the hardest-hit stocks, down around 30% from its all-time high. However, I don't think this sell-off is a sign of things to come; instead, it's a buying opportunity for investors with a long-term view.
In times of market turmoil -- like now -- two ideas in particular stand out: the need to own some "safe" stocks, or those that can hold up under pressure, and the opportunity to buy stocks, after declines, for a great price.
Which Warren Buffett quote is most relevant right now? My vote goes to his classic statement, "Be fearful when others are greedy and greedy when others are fearful.
Although Warren Buffett can't predict the future, he almost certainly wasn't surprised by the Nasdaq Composite (^IXIC -0.18%) falling into correction territory. In fact, based on the investment decisions he and his team have been making at Berkshire Hathaway (BRK.A -0.03%) (BRK.B -0.17%), it seems likely that he was rather expecting something like this to happen at some point.
The Nasdaq-100 index is home to 100 of the largest technology companies listed on the Nasdaq stock exchange. It's coming off a barnstorming two-year run, returning 53.8% during 2023 and a further 24.8% in 2024, but it's currently approaching correction territory with a drop of 9% from its record high.
Warren Buffett has often endorsed a contrarian investment strategy. "Tumbling markets can be helpful to the true investor if he has cash available when prices get far out of line with values.
In recent years, investors showed their optimism about the future by flocking to high-growth stocks -- and that pushed the prices of some of these players into the stratosphere. The idea was these companies would benefit from a potentially lower interest-rate environment ahead, and, in many cases, the development of artificial intelligence (AI).
After a sharp rise the past few years, the stock market has had a rocky start to 2025. Concerns that President Donald Trump's tariff policies could send the economy into a recession have extended the declines for the major market indexes over the last few weeks.
The Nasdaq entered correction territory earlier this week, and a number of leading artificial intelligence (AI) semiconductor stocks have been swept up in the market downturn. However, spending on AI infrastructure has not suddenly dried up, and in fact it is still on the rise.