Warren Buffett On The Correction

By Greg Feirman of Top Gun Financial Planning

Friday, March 14, 2025 5:17 PM EDT

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I just got off the phone with Warren Buffett during which I picked his brain about the current correction. There’s a lot of noise out there right now so I wanted to hear it straight from the GOAT. Here’s what he told me….

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TG: Good Morning GOAT! I hope I didn’t wake you. I know it’s only 5am in Omaha but I had to speak with you. How are you thinking about the current market correction?

WB: Good Morning TG!

It’s been a brutal three weeks in which the S&P has gone straight down. From a closing high around 6,150 on Wednesday February 19 the S&P has lost 630 points or about 10% through Thursday’s close (March 13, 5,521). Technically, all the major indexes are below their 50 and 200 DMAs. The median stock in the S&P is down 18%. Some stocks especially sensitive to the economy like AirBnB (ABNB) and Restoration Hardware (RH) have been hit much harder.

TG: I know GOAT. I know! But are you buying?

WB: Every morning on my way to work I stop at McDonald’s for breakfast. While I’m getting ready my wife puts the money in a cup. If the market’s doing badly she puts in $2.61. If it’s doing well $3.17. If it’s in the middle $2.95.

TG: That’s nice GOAT. I hope you have a nice breakfast. But what’s your point?

WB: As everyone’s been talking about, Berkshire has accumulated a huge cash pile in excess of $300 billion of late – the most cash we’ve ever held. That’s because the market has gotten expensive and I haven’t been able to find many good opportunities to put cash to work.

In October 2008, when the market was crashing, I wrote a now famous editorial for The New York Times titled “Buy American. I Am” in which I said:

Let me be clear on one point: I can’t predict the short term movements of the stock market. I haven’t the faintest idea as to whether stocks will be higher or lower a month – or a year – from now….

But fears regarding the long-term prosperity of the nation’s many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now.

– Warren Buffett, “Buy American. I Am”, The New York Times, October 16, 2008

TG: I’m familiar with that editorial. Some people on Twitter on posting it now. So you’re buying?

WB: No, not exactly. When I wrote that the market had been going down for more than a year and was off significantly more than it is today. 10% in three weeks is a significant drawdown but it’s just a correction at this point. Some of the froth has been taken out of the market but it’s still expensive. I’m starting to look at the pretty girls but I’m not yet feeling like “an oversexed man in a whorehouse”.

TG: It’s nice to know about your breakfast routine and sex life GOAT but could you be a little less cryptic?

WB: The market will be fine over the long term as I’ve always said due what I’ve termed The American Tailwind. As I said in The New York Times editorial, in the 20th century we went through two World Wars among other military conflicts, The Great Depression, a dozen or so recessions and financial panics, oil shocks, a flu epidemic, the resignation of a disgraced president, etc… Yet the Dow rose from 66, to 11,497. I’m not predicting an exact repeat this century but the long term trend is still up.

Last December you wrote a nice blog forecasting a 25% drop for the S&P in 2025 (“Why The S&P Will Drop 25% In 2025”, Top Gun Financial, December 10, 2024). That seems reasonable given the run we’ve had, current valuations and other concerns like persistent inflation and geopolitcal issues as you outlined in the blog. As I said above, the S&P is down 10% in the last three weeks. In other words, we’re probably about 40% of the way there.

So I’ve got my eye on things, I’m creating a watch list, but I’m not doing any big long term buying just yet. I’m paying attention and when things start to look really bad and everyone else is selling like it’s the end of the world, I’ll start to put Berkshire’s cash to work in a big way like I always have. Because what you’ve got to understand TG is that there’s always a reason to sell but over the long term the American system of mostly free enterprise works – and this time isn’t different.

TG: Gotcha GOAT! Thanks so much. You never did tell me how much you’re going to spend on breakfast at McDonald’s this morning though.

WB: $2.95.

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