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How would Warren Buffett handle a 2023 stock market crash?

Warren Buffett at a Berkshire Hathaway AGM
Image source: The Motley Fool

Ahead of a possible market crash, we might worry about a new bank crisis and a financial meltdown. But I think top investor Warren Buffett might be rubbing his hands with glee.

He’s seen many slumps in his time, and came through them all. He took control of Berkshire Hathaway back in 1965. And he turned it into a stunning success.

From 1965 to 2022, the US S&P 500 index rose nearly 25,000%. That’s a great result. But Buffett has it well beaten. Berkshire Hathaway shares soared by a huge 3.8m%.


It’s very hard to come even close to that kind of gain, without Buffett’s brains and years of experience. But I think we can still learn from him to help us through any 2023 stock market crash.

Whatever happens, he never panics. Markets selling off shares? He’s out there looking for the best value ones to buy.

Raining gold

Warren Buffett famously once wrote:

Every decade or so, dark clouds will fill the economic skies, and they will briefly rain gold. When downpours of that sort occur, it’s imperative that we rush outdoors carrying washtubs, not teaspoons.

Berkshire Hathaway letter to shareholders, 2016

If the market crashes, like it did in 2020, there’s an instinct to sell. We don’t like uncertainty and risk. We’ve evolved to avoid them and seek safety.


So, sell risky stocks when the storm is here? And stash some bars of gold under the bed? Well, that might help to save some cash.

But those who made the big money last time were buying up the cheap shares that the fearful were selling off. It was the greedy who struck it rich.

It would surely be just the same in a 2023 crash. I don’t know if US bank failures might trigger it. But the fear has already sent UK bank shares tumbling.

Bust banks

Will Barclays go bust, just because it operates in the US? It’s strictly regulated, and its liquidity is the best its been in decades. I think the rules brought in by the FCA after the last bank crisis should keep UK banks safe.

My Lloyds Banking Group shares are falling. And they might fall further. And, even without a full-blown banking crunch, there’s still inflation.

That remains stubbornly high, despite big interest rate hikes. If it carries on, it could put the dampers on UK stock market prices.

Sell, or buy

If that happens, will I sell my Lloyds shares and buy gold? Or put my money in a Cash ISA for a year or two? No, I’ll invest as much as I can in snapping up cheap shares.

I don’t have as big a washtub as Warren Buffett does to fill with shares. But I’ll buy as many as I can.

I already have some decent diversification. So my next purchase, as soon as I’ve saved a good investing amount, is likely to be Barclays. As long as it stays cheap, that is. Or, even better, gets cheaper.

The post How would Warren Buffett handle a 2023 stock market crash? appeared first on The Motley Fool UK.

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Alan Oscroft has positions in Lloyds Banking Group Plc. The Motley Fool UK has recommended Barclays Plc and Lloyds Banking Group Plc. 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 2023