In recent months there has been talk of an economic recession, also due to the measures adopted by the Federal Reserve. However, there are many ways to survive and thrive even during a recession. Who better than the Oracle of Omaha, Warren Buffett, to give this advice?
Get notified with breaking news, our articles and more!
Follow us
Here are the five things Buffett says to do before a recession.
1. Strengthen liquidity
The first thing to do to prepare for an economic downturn is to replenish as much liquidity as possible. Holding cash in your hand allows you to make decisions that are beneficial to you, rather than being forced by forces outside your control.
“We need to have a lot of liquidity available so that people continue to make smart decisions instead of being forced to do so,” he said in an interview with CNBC.
2. Invest in blue chip stocks
Blue chip stocks are among the safest options when it comes to the stock market, and Buffett believes that large companies can be a safe destination for investments.
“Most large companies will set new profit records in 5, 10, and 20 years,” he wrote in a 2008 article.
3. Maintain a long-term perspective
Recessions can last a few months, so short-term plans don’t work in this case. While some recessions may be longer than others, they are temporary. So, if your investments decrease in value, don’t worry and keep a long-term view. In the end you will come out victorious.
4. Don’t fret, stick to your plan
One of Buffett’s famous quips is that he will buy companies at a “decent price,” taking a “business-as-usual” approach.
“We just want to buy good companies run by people we like and trust, and at a decent price. And we will continue to do so,” she told CNBC.
5. Don’t put all your money in no-growth businesses
You may be tempted to invest your money in risk-free assets, such as savings accounts and deposits, where there will not be much growth or the growth will be lower than the rate of inflation.
“Stocks will almost certainly outperform cash over the next decade, probably by a substantial amount,” Buffett said.
For more updates on this topic, add Benzinga Italy to your favorites or follow us on our social channels: X And Facebook.
Receive exclusive insights into market movements 30 minutes before other traders
The 14-day free trial of Benzinga Pro, available in English only, gives you access to exclusive information so you can receive actionable trading signals before millions of other traders. CLICK HERE to start your free trial.
Image courtesy: Shutterstock
