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When it comes to beating the stock market, few investors have come close to replicating billionaire investor Warren Buffett’s staggering track record. Since the 1960s, his investment firm, Berkshire Hathaway, has achieved an average annualised return of 19.9% – basically double that of the S&P 500. And that’s after enduring multiple periods of extreme market volatility.
With the US economic environment looking increasingly uncertain as tariff impacts emerge, and American stock valuations reach new record highs, the risk of renewed volatility appears to be substantial. And while there’s no certainty of a market crash or correction, heeding Buffett’s advice in the current climate might be quite a prudent move.
So what does the ‘Oracle of Omaha’ suggest investors should do in times like these? And how has he applied these tips to his own investment portfolio?
‘Widespread fear is your friend as an investor’
Stock market volatility is an inevitable part of every investment journey. Yet while most investors fear it, Buffett welcomes sudden price swings with open arms. Perhaps the earliest example of this was his investment in American Express (NYSE:AXP) back in the 1960s.
At the time, a company called Allied Crude Vegetable Oil faked its inventory by filling its oil tanks with mostly water and a layer of oil on top. This fooled inspectors for quite some time. But when the fraud was eventually discovered, American Express came under enormous pressure, given that it was its own warehousing subsidiary that issued the receipts saying everything was by the book.
Despite not knowingly participating in the fraud, American Express became exposed to legal liabilities, sending the stock crashing by around 50%.
During all this panic selling, little attention was being paid to its unaffected traveller’s cheque and card franchise business. But after doing some digging, Buffett noticed the opportunity snapping up American Express shares at a massive discount, which later went on to recover and grow into the $238bn giant it is today.
‘Pick businesses, not stocks’
While everyone was busy looking at the stock price, Buffett stayed focused on the business. And as a result, he discovered a phenomenal buying opportunity. And even after a bit of selling along the way, American Express is now Berkshire Hathaway’s second-largest position in 2025.
Looking at its latest results, the payment processing and lending firm continues to exhibit strength, reaffirming its full-year guidance, while taking active steps to expand its reach to younger generations. Of course, even with size on its side, the firm still has competitive threats to tackle, particularly from the fintech space, that are challenging its 10% annualised revenue growth ambitions.
Nevertheless, Buffett and his team’s conviction remains strong given their position sizing. And with fears of market volatility lurking around the corner, investigating the long-term potential of American Express shares might be a sensible move today.
