“Uncertainty actually is the friend of the buyer of long-term values.”
Uncertainty in the stock market creates fear, and fear creates panic selling, which forces prices downward regardless of a business’s long-term economic prospects. This chain reaction creates a buying opportunity if the long-term economic value of the business is in excess of its selling price. For it is the long-term economics of the business that will eventually pull the stock price back up in line with the realities of the business. Warren’s wealth of knowledge about the long-term economics of a business enables him to be certain about which companies will go back up when other investors are through with their bout of uncertainty.