How Buffett Survived Every Market Crash Since 1962

By the WealthOS Research Desk

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Introduction

Warren Buffett has lived through every major market dislocation of the past sixty years: the 1962 selloff, the 1973-74 bear market that cut the Dow nearly in half, Black Monday in 1987, the dot-com collapse, the 2008 financial crisis, and the 2020 pandemic crash.

He did not predict a single one of them. He says so repeatedly.

What he did instead is the subject of this article: a repeatable posture toward volatility that does not depend on forecasting. That distinction matters, because most investors spend their energy on the part that cannot be done — calling the top — and neglect the part that can.

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The Record Is Not the Point

Buffett is usually described as a stock picker. Read the shareholder letters closely and a different description emerges: he is a cash-flow buyer who refuses to be a forced seller.

Both halves of that sentence carry the strategy.

Cash-flow buyer. He buys businesses whose earnings he can estimate with reasonable confidence a decade out. If those earnings are durable, a falling price is a lower entry point rather than a verdict.

Never a forced seller. He arranges his affairs so that no market condition can compel him to sell. Berkshire's insurance float supplies long-dated, low-cost capital. He holds cash. He avoids debt structures with covenants that a panic could trigger.

A falling market only harms investors who must sell into it. Remove that condition and a crash becomes an opportunity instead of a threat.

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What He Actually Did in Each Crisis

1969 — he closed the partnership. Not a crash, but the most instructive decision of his career. With markets euphoric and bargains scarce, Buffett wound up Buffett Partnership and returned capital to his partners. He did not know what would happen next. He knew he could not find value, and that was sufficient reason to stop.

1973-1974 — he bought. While the market fell roughly 45% from its 1973 high, Buffett was accumulating stakes including The Washington Post, bought at a valuation he later described as a large discount to what a private buyer would pay for the same assets. The price was frightening. The value was not.

1987 — he did nothing. On Black Monday the market fell about 23% in a single day and Berkshire's shares fell hard with it. Buffett's response, reconstructed from later commentary, amounted to: the businesses were fine, and the prices were not the businesses. He also negotiated a large preferred investment in Salomon Brothers during the period.

1998-2000 — he was publicly mocked. During the dot-com mania Buffett was criticized for refusing to buy technology stocks. His answer, given at Sun Valley in 1999, was that he would not invest in what he did not understand, and that other people getting rich quickly did not enlarge his circle of competence. When the bubble burst, Berkshire's relative performance recovered sharply. Note what he never did: predict the crash.

2008 — he wrote an op-ed telling people to buy. On October 16, 2008, with the financial system genuinely at risk, Buffett published "Buy American. I Am." in The New York Times, disclosing that he was buying US equities in his personal account. He also stated plainly that he had no idea what the market would do in the near term, and that he had been early in similar situations before.

2020 — he did not buy aggressively, and explained why. Berkshire sold its airline positions and did not deploy its cash pile at the March lows. In the following shareholder letter Buffett acknowledged the airline sales as a mistake and said he had misjudged the pace of the recovery. It is a useful reminder that the approach is not infallible. He simply refuses to claim certainty he does not have.

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The Pattern

Across six decades, four behaviours repeat:

Never forecast the market. He has consistently said he cannot predict short-term prices, including his own company's.

Keep the option to act. Cash and durable funding turn a decline into a choice rather than an emergency.

Judge price against value, not against last month's price. Volatility is information about price, not about the business.

Refuse the crowd, including when the crowd is winning. The difficult half of the famous line is being fearful when others are greedy, which means sitting out parties.

The most-quoted version comes from the 1986 shareholder letter: the aim is to be "fearful when others are greedy and to be greedy only when others are fearful." The word most often dropped in quotation is *only*.

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Conclusion

Crashes are not the test. Anyone can survive a crash they saw coming. The test is whether your position survives a crash you did not see, which is every one of them.

Buffett's answer was structural rather than psychological: buy what you can value, fund yourself so you are never a forced seller, keep cash for the day prices dislocate, and stop pretending you can time it. None of that requires predicting the next crisis. It only requires being able to act when it arrives.

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This article draws on Berkshire Hathaway shareholder letters (1977-2024), Buffett's published commentary, and contemporaneous reporting. It is educational material, not investment advice.