Warren Buffett's Most Important Advice in Today's Market

Investors around the world admire Warren Buffett and the impressive returns he's brought to Berkshire Hathaway shareholders. But in today's market, there's one piece of Buffett wisdom that's most important to remember.

In the following video, Dan Caplinger, The Motley Fool's director of investment planning, points to Buffett's statement that "you only find out who is swimming naked when the tide goes out." Dan notes that stocks have made a huge bull-market run over the past five years, making it easy for anyone to make money in the market. But what distinguishes the best stocks from the rest only becomes clear when markets go flat or pull back. Dan takes closer looks at Rite Aid (NYSE: RAD  ) , Fannie Mae (NASDAQOTCBB: FNMA  ) , and Freddie Mac (NASDAQOTCBB: FMCC  ) , pointing out the dangers involved as well as the possible returns. Yet he also points out that even stocks that have clear potential for huge growth, such as Tesla Motors (NASDAQ: TSLA  ) and Micron Technologies (NASDAQ: MU  ) , have to justify their share-price gains with fundamental growth. Dan concludes that you need to preserve wealth as well as finding ways to make it grow, and the right balance will keep you on track to meet your financial goals.

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In good times and bad, Buffett has many things you should know in order to become a better investor. Now, you can tap into the best of Warren Buffett's wisdom in a new special report from The Motley Fool. Click here now for a free copy of this invaluable report.

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  • Report this Comment On February 16, 2014, at 1:20 PM, KrisShankar wrote:

    I'm somewhat surprised by this rather sweeping generalization of Buffet's advice. To lump Rite Aid with the likes of Fannie Mae and Freddie Mac is a mis-classification at best. The latter companies face major legislative headwinds and a recalcitrant housing market. Rite Aid, on the other hand, has very favorable tailwinds (Affordable care enrollees, patented medicines converting to generics) and company-specific improvements in the form of remodeled stores, Wellness+ programs and opex restructuring. With about one-third the price/sales ratio of peers Walgreens & CVS, RAD is deeply undervalued and is undergoing a well-known phenomenon of mean reversion. Recent 13-D filings also show major stakes by T. Rowe Price and Blackrock in the prior quarter. Dan, you ought to give credit to investors who can separate the wheat from the chaff.


  • Report this Comment On February 19, 2014, at 12:38 PM, smauney wrote:

    When you got nothing blurt out "Warren Buffett". It's like magic dust that makes them dazed and confused.

  • Report this Comment On February 19, 2014, at 4:18 PM, greenspans wrote:

    Warren Buffet is trying to buy Fannie Mae from the Government. He will change the name and keep all the shareholders as reports will come in the next week the large profits that fannie mae has made recently.

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Dan Caplinger

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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Related Tickers

9/1/2015 12:03 PM
FNMA $2.32 Down -0.05 -2.11%
Fannie Mae CAPS Rating: **
MU $16.06 Down -0.35 -2.13%
Micron Technology,… CAPS Rating: ****
RAD $7.99 Down -0.26 -3.15%
Rite Aid Corp CAPS Rating: ***
TSLA $244.00 Down -5.06 -2.03%
Tesla Motors CAPS Rating: **
FMCC $2.22 Down -0.04 -1.77%
Freddie Mac CAPS Rating: **