Benjamin Graham — Warren Buffett's mentor — taught that one was to stay invested, even during times of war or periods of extreme uncertainty.
Benjamin Graham
On Uncertainty
"There is some comfort to be gleaned from the last 57 years. Through all their vicissitudes and casualties, as earth-shaking as they were unforeseen, it remained true that sound investment principles produced generally sound results. We must act on the assumption that they will continue to do so."
"Just because of the uncertainties of the future the investor cannot afford to put all his funds into one basket—neither in the bond basket, despite the unprecedentedly high returns that bonds have recently offered; nor in the stock basket, despite the prospect of continuing inflation."
Graham does suggest investing more of one’s portfolio in bonds in a high interest-rate bull-market environment.
On War
"Since war and inflation are inseparable, paper money and securities payable in specific amounts of paper money would seem to offer less financial or basic protection than soundly chosen common stocks, representing ownership of tangible, productive property."
"As it happens, the World War II period and the postwar boom were more beneficial to the smaller concerns than to the larger ones, because then the normal competition for sales was suspended and the former could expand sales and profit margins more spectacularly. "
Warren Buffett
Annual Meeting
Warren Buffett too has mentioned that the American market has grown through two world wars and a depression.
"Since 1942, there have been 14 Presidents – 7 Republicans and 7 Democrats. One was assassinated, and one resigned under pressure. We had recessions, panics, wars and crises, and through it all America moved ahead. In less than three of my lifetimes, back when Jefferson was 12, there was nothing here. This country really works. We will have people saying the world is ending after every election. This country has seen a six-fold increase in GDP per capita in my lifetime."
On Ukraine - 2014
"If you’ve got a wonderful business of your own in Peoria, Illinois, why in the world would you sell it today because of what’s happening in the Ukraine? ... The same applies if you have a piece of a wonderful business or a piece of many wonderful businesses. People react too much to short-term things in the stock market."
Submitted by GrahamValue. Created on Wednesday 29th July 2020. Updated on Friday 25th February 2022.