Charlie Munger Says Investors Who Can't Handle Market Volatility 'Deserve the Mediocre Result'

Amid market turbulence, legendary investor Charlie Munger once offered his perspective, urging investors to remain steadfast and focused on long-term fundamentals.

What Happened: Following President Donald Trump‘s declaration of extensive tariffs, the S&P 500 momentarily slipped into bear territory. However, Trump later instituted a 90-day halt on tariffs exceeding 10% for certain countries, while escalating duties on Chinese goods to 125%. This resulted in the S&P 500 surging over 9% on the day.

Munger, the former vice-chairman of Berkshire Hathaway, consistently asserted that significant fluctuations in stock prices are a standard aspect of investing. He once expressed to a BBC interviewer, “I think it’s in the nature of long-term shareholding that the normal vicissitudes in markets means that the long-term holder has the quoted value of his stocks go down by, say, 50%.”

He further stressed that if investors are not prepared to withstand periodic market downturns, “you’re not fit to be a common shareholder, and you deserve the mediocre result you’re going to get compared to the people who can be more philosophical about these market fluctuations.”

Also Read: Charlie Munger’s Investment Wisdom: ‘If People Weren’t So Often Wrong, We Wouldn’t Be So Rich’

During periods of market instability and volatility, Munger advised investors to stay committed and persist in purchasing stocks through downturns. He was of the belief that major drawdowns were infrequent opportunities to amass wealth. “When you get a lollapalooza, for God’s sakes, don’t hang by like a timid little rabbit,” Munger advised. “Don’t hang back.”

Why It Matters: Munger’s advice is particularly relevant in the current climate of market volatility. His philosophy of staying the course during market downturns and taking advantage of major drawdowns to build wealth could be a valuable strategy for investors navigating these uncertain times.

His belief that large swings in stock prices are a normal part of investing serves as a reminder to investors to remain patient and committed in the face of market fluctuations.

Read Next

Charlie Munger’s Three Investment Lessons: ‘Buy Wonderful Businesses At Fair Prices, Big Money Isn’t In Buying Or Selling-It’s In Waiting, Good Businesses Are Ethical Businesses’

Shutterstock: Kent Sievers