Warren Buffett: "Some People Should Not Own Stocks" Amid Stock Market Decline

In an interview with CNBC on Friday, April 5, 2025, Berkshire Hathaway Chairman Warren Buffett expressed a candid view that "some people should not own stocks at all" if they are prone to panic over price fluctuations, such as the stock market crash this week. His statement was made against the backdrop of the U.S. stock market witnessing a severe decline, losing $3.5 trillion in market capitalization in just one day, after China imposed retaliatory tariffs in response to the new trade policy announced by President Donald Trump on April 2. Buffett: Don't panic sell when stock prices drop According to market data from CNBC, the Dow Jones Industrial Average has dropped sharply by 2,231 points, equivalent to 5.5%, pushing this index into correction territory – defined as a decline of 10% or more from the most recent peak. The S&P 500 index fared no better, losing nearly 6% of its value and a total of over $6 trillion in market capitalization over the past two trading days, marking the worst two-day performance since the early days of the COVID-19 pandemic. Meanwhile, the Nasdaq Composite has entered bear market territory, falling more than 20% from its peak in December and closing below this threshold for the first time since 2022. Globally, the MSCI index measuring global stocks fell by 5.37%, marking the strongest weekly decline since 2020. The oil market was also severely impacted, with Brent crude oil prices dropping by 6.5% to $65.58 per barrel, and US crude oil falling by 7.4% to $61.99 per barrel – both hitting their lowest levels in over three years. The decline occurred after the employment report showed that the U.S. economy had added 228,000 jobs in March, far exceeding the market's forecast of 135,000 jobs. However, this positive news was not enough to ease investors' concerns about the economic repercussions of President Trump's trade policies. With his famous long-term value investing philosophy, Buffett advises investors to view owning stocks as owning a part of a business, rather than panicking and selling off when prices drop. "If you buy a house for $20,000 and the next day someone offers you $15,000, you wouldn't sell it just because of that," he explained. "You look at the house, or anything similar. But some people don't have the right mindset or emotions to own stocks." Buffett emphasized that the longer you hold stocks, the lower the risk, while bonds become riskier as the maturity date extends. Berkshire Hathaway's stock also could not escape the downward trend, closing Friday's session with a decline of more than 6%. However, this company – which has net sold $134.1 billion in stocks over the past year and increased its cash reserves to $334.2 billion – still recorded a stock price increase of 9.41% year-to-date. Fed Chairman Powell: No possibility of recession? In a speech at a conference in Arlington, Virginia, Federal Reserve Chairman (Fed) Jerome Powell noted that Trump's new tariffs could drive inflation higher and slow economic growth. "These tariffs are larger than expected," Powell said. "The economic consequences, including higher inflation and slower growth, are likely to be the same." Powell acknowledged that many forecasts from the private sector are leaning towards the likelihood of an economic recession in the U.S. Investment bank JP Morgan recently raised the probability of a global recession by the end of the year to 60%, up from 40% previously. Peter Cardillo, chief economist at Spartan Capital Securities, believes that Powell's remarks could disappoint investors who expect the Fed to intervene soon. "I think his comments will disappoint those who believe the Fed will act in the short term," Cardillo commented. However, the USD has recovered somewhat after falling on Thursday, with the dollar index rising 0.6% on Friday. The euro fell 0.63% to 1.10976 USD, reversing most of the 1.8% increase the previous day – the largest one-day increase since November 2022. Against the Japanese yen, the USD rose 0.58% to 146.9. Buffett's advice during the market storm Buffett's perspective is not just a warning but also a lesson in investment psychology. He believes that panic selling is "a foolish act" and encourages investors to stand firm, focusing on long-term value rather than short-term fluctuations. In the context of a global market facing instability from trade wars and economic pressures, the advice from the "Omaha Oracle" could serve as a guiding light for those patient enough to weather this storm.