Buffett not only has the experience of clearing positions to avoid stock crashes, but also has a history of full positions passing through bulls and bears. As long as he is confident, he will be able to deal with the volatility and pullback of the market. The following summarizes Buffett's experience in dealing with many stock market crashes as the three essentials of stock crashes:

One is to be calm in the disaster: panic is easy to lose.

How did Buffett deal with the stock market crash?

Before the 1987 stock market crash, the US stock market rose for five years in a row, which was an unprecedented bull market. From 1984 to 1986, the US stock market continued to soar, rising 2.46 times, with the Dow rising from less than 1000 to an astonishing 2258.

But just when people were intoxicated with the joy of five consecutive years of rising stock markets, a stock market crash suddenly came. On October 19, 1987, the first Black Monday in history, the Dow fell 508 points, or 22.6%, in one day.

The stock market plummeted, as did Buffett's Berkshire shares. 99% of Buffett's personal wealth is in Berkshire, the listed company he controls. Buffett lost $342 million in wealth on the day of the crash. Berkshire's share price has plummeted 25% in just one week, so how did Buffett react to the blizzard?

At the moment of the crash, Buffett may be the only person in the United States who doesn't pay attention to the collapsing stock market all the time. There is no computer or stock market in his office, and he doesn't look at the stock market at all. Throughout the day, he stayed quietly in the office as usual, making phone calls, reading newspapers and reading the annual reports of listed companies.

Two days later, a reporter asked Buffett: what does this stock crash mean?

Buffett's answer has only one sentence: it may mean that the stock market has risen too high in the past.

Buffett did not panic to inquire about the news, nor panicked to sell stocks, in the face of the sharp decline, in the face of his wealth has shrunk sharply, in the face of the collapse of his holdings of heavy stocks, he is very calm.

The reason is simple:He firmly believes that these listed companies he holds have long-term sustainable competitive advantages, good development prospects and high investment value.He firmly believes that the stock market crash, like a natural disaster, is only temporary, and that eventually the stock market will pass, the stock market will return to normal, and the share price of the company he holds will eventually reflect its intrinsic value.

Second, be careful before a disaster: a carelessness may make you regret for the rest of your life.

For everyone, natural disasters are the same, but the losses caused by natural disasters are different. Those who are well guarded in advance suffer relatively small losses and return to normal much more quickly.

So how did Buffett deal with it before the crash?

Another stock market crash that Buffett encountered was in 1999. As a result, the stock market crash came. The US stock market fell 9.1 per cent, 11.9 per cent and 22.1 per cent in 2000, 2001 and 2003, a cumulative decline of more than half. Buffett's performance rose more than 10% during the three-year stock market crash, beating the market by 60%.

Why? Because Buffett is already ready to deal with the stock market crash.

The US stock market rose more than 2.5 times from 1995 to 1999, an unprecedented bull market, and the most important driving force was the surge in Internet and high-tech stocks. On the other hand, Buffett refused to invest in high-tech stocks and continued to firmly hold stocks in traditional industries such as Coca-Cola Company, American Express Co and Gillette. As a result, the S & P 500 index rose 21% in 1999, while Buffett's performance was only 0.5%. He not only lost to the market, but also lost miserably, with a difference of more than 20%. This is Buffett's worst year to lose to the market.

At the 1999 annual meeting, shareholders criticized Buffett, and almost all the newspapers and media said that Buffett's investment strategy was out of date, but Buffett was still unimpressed.

It is this firm long-term value investment strategy that enabled Buffett to survive the stock market crash.

Buffett is a very cautious person, he does not buy stocks easily, only when he is very sure that he will sell heavily. Buffett said:"I take certainty very seriously. The fundamental reason why you can't take major risks is that you don't think about certainty in advance. "

Buffett's pursuit of certainty does not come from the volatility of the stock market and the rise and fall of stock prices: "I never try to make money from the stock market." We buy stocks on the assumption that they close the stock market the next day or do not reopen the stock market for five years.

The certainty that Buffett pursues comes from the continuous growth of the intrinsic value of the company.

Buffett firmly believes that value will eventually determine the price: "the market may ignore the company's success for a period of time, but it will be affirmed by the stock price in the end." As Graham said: the market is a voting machine in the short term, but it is a weighing machine in the long run. "

Buffett's pursuit of profit certainty comes from the margin of safety, that is, the gap between the buying price and the intrinsic value.Buffett firmly believes that the margin of safety is the cornerstone of successful investment, and only a sufficient margin of safety can provide sufficient security for investment: "when you build a bridge, you insist on a carrying capacity of 30,000 pounds, but you only allow trucks with a load of 10,000 pounds to pass. The same principle applies to the field of investment.

Why do many people suffer miserable losses or even net losses after the dotcom stock bubble crash in 1999?

Because they are not careful when buying stocks, they have no idea what the intrinsic value of the company's stock is, they have no idea how big the margin of safety is, there is no certainty of investment profit at all, and there is often only one simple reason for buying: the stock is rising, and it looks like it will rise in the future.

They go up to buy, buy to go up, revel in the joy of making money quickly, but did not expect that a stock market crash is waiting to get even with them. Despite the uptick now, be careful to settle the general ledger later.

Why is Buffett still unscathed after many major stock market crashes? Because he is very cautious, because he never fights a battle of uncertainty.

Buffett always keeps in mind two basic principles taught by his teacher Graham: first, never lose money, and second, never forget the first one.

Third, be patient after the disaster: wait for a real investment opportunity.

When prices rise during natural disasters, many people will want to make a fortune. When the stock market crash, share prices plummeted, many people are eager to bottom, also want to make a disaster fortune.

Buffett has a stock in the Washington Post. He has held it for 34 years, which has increased 128 times. If, according to the above principle, he doubled and tripled and sold, how could he earn more than a hundred times later?

Buffett has seen the stock prices of many once brilliant companies plummet. If they buy a lot, they will only fall more and more, or even later, when the company is delisted and liquidated, making you lose everything. You know, unlike the United States and China, those junk stocks will not come forward to save the restructuring.

Eager to copy the bottom, it is likely to be a falling knife, and what you grasp is often the blade, but rarely the handle.

Looking back at Buffett's performance in the stock market crash, you will find that Buffett is in no hurry to copy the bottom. On the contrary, he will wait patiently and then wait.

Buffett withdrew from the stock market before the great bull market in 1969. Unexpectedly, the stock market rebounded quickly after the adjustment in 1970. In 1971 and 1972, the stock market continued to rise sharply. Buffett was unmoved and continued to wait patiently.

In 1973, the share price of "beautiful 50 shares" fell sharply, the index fell nearly 15%, and the market was shaky. In early October 1974, the Dow Jones index plummeted from 1000 to 580. by the end of the year, the u.s. stock market had fallen by more than 26%, the market had fallen by 40% in two years, and many listed companies had watched their shares halve in value.

Almost every stock in the United States has a single-digit price-to-earnings ratio, which is very rare on Wall Street. No one wants to hold any more stocks. Everyone is selling stocks. Buffett waited for two years in the stock market crash until the market was extremely pessimistic, and when the stock market fell to everyone's fear, he returned to the market and began to buy greedily at low prices, making a lot of money.

After the bursting of the Internet technology bubble in 2000, Buffett has endured five years to re-enter the stock market. Buffett is never in a hurry to rebound. What he wants is not the small profit of short-term speculation, but the big profit of long-term value investment. therefore, he will patiently wait for the stock market to fall again and again: "only when the capital market is extremely depressed and the whole business community is generally pessimistic will the investment opportunity to achieve very generous returns emerge."