For the past several weeks, I’ve been having some meaningful conversations with clients. The theme that keeps coming up: they feel like they’re losing money, and they’re worried. That concern is real and completely understandable.
Yet, when we look at the returns over the past one, three, and five years — the picture tells a different story. Remarkable, actually.
But with the recent market volatility and the uncertainty around the war, I think it’s a good time for a gut check.
Can You Handle a 50% Drop?
Charlie Munger — Warren Buffett’s longtime partner — never sugarcoated things. And one of his most memorable observations feels especially relevant right now:
“If you’re not willing to react with equanimity to a market price decline of 50% two or three times a century, you’re not fit to be a common shareholder, and you deserve the mediocre result you’re going to get.”
That really stings! But fair enough.
Please know that I am not predicting a 50% drop! Nobody can. But Munger’s point stands regardless.
Berkshire Hathaway itself lost more than half its value in 2008. So did Amazon. So did Apple. These weren’t bad companies. The market just goes through cycles. The investors who got hurt weren’t the ones who stayed — they were the ones who sold.
Here are a few things worth thinking about, especially now:
- No single investment should be able to wreck the whole plan. A well-diversified portfolio is built to absorb the hits.
- Hold some cash. If you’re never forced to sell at the worst moment, you won’t have to.
- Stay the course. If nothing fundamental has changed, neither should your plan.
It’s worth remembering that playing it too safe has its own cost. Returns that don’t keep pace with inflation are a loss in slow motion.
If any of this has you second-guessing your plan, let’s talk. My door is always open.
Plan well,
Barbara
May 3, 2026
Source:
https://www.msn.com/en-us/money/savingandinvesting/buffett-and-munger-s-strategy-to-shield-your-portfolio-from-a-50-market-drop
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