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Stock market crash: I’m buying UK shares like Warren Buffett to retire in comfort

Royston Wild
·3-min read
The UK national flag in front of Canary Wharf skyscrapers where professionals trade shares for a living.
The UK national flag in front of Canary Wharf skyscrapers where professionals trade shares for a living.

UK share markets have had a terrific run in November. The FTSE 100 and FTSE 250 are still up around 15% and 12% respectively since the beginning of the month. But the stock market rally has run out of steam in recent days as giddiness over a Covid-19 vaccine has receded. It’s quite possible that coronavirus news flow in the coming days and weeks could send UK share prices sharply lower again too.

It doesn’t matter much to me whether London share markets soar or sink in the near term though. Of course, I’d prefer them to head northwards. But, as a long-term UK share investor, I’m not too concerned. Any share movements in the coming weeks and months won’t have a significant impact on my eventual returns, for good or for bad.

In fact, I’ve continued to invest in my Stocks and Shares ISA despite recent macroeconomic malaise. Some might think I’m crazy. But buying when global stock markets crash can be a fast way to make a fortune, as some of the world’s most successful investors have shown.

Buying like Warren Buffett

Take Warren Buffett for example. The world’s fourth richest man (worth an estimated $88.2bn) has made his fortune betting on shares after market corrections, claiming once that “bad news is an investor’s best friend.”

Back in 2008, he claimed to The New York Times that a stock market crash “lets you buy a slice of America’s future at a marked-down price.” It’s a theme that can equally apply to UK shares, of course. And it’s a strategy that can reap huge rewards for those brave enough to keep buying shares despite intense volatility.

close-up photo of investor Warren Buffett
close-up photo of investor Warren Buffett

According to Buffett: “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 five, 10 and 20 years from now.”

Buying UK shares for a comfortable retirement

Investors clearly need to be careful before buying UK shares in the current climate. Plenty of British companies have debt-heavy balance sheets which could endanger their very existence in the event of a long economic downturn. A lot of stocks with previously bright earnings outlooks have become a lot more fragile in a post-coronavirus landscape.

Still, there remains plenty of top-quality stocks that should provide brilliant returns over the long term. And, as Warren Buffett’s advice suggests, a great many UK shares like this can be picked up for a knock-down price following the 2020 stock market crash. I’ve gone dip-buying with my ISA despite the uncertain near-term economic outlook. And with the FTSE 100 and FTSE 250 still down since the start of the year, I plan to keep shopping for bargains too. It could help me build an enormous pot of cash for my retirement.

The post Stock market crash: I’m buying UK shares like Warren Buffett to retire in comfort appeared first on The Motley Fool UK.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Motley Fool UK 2020