• It is important to always do your own research before making decisions about investing.      

• This article was produced on 9 April 2025.  

• Past performance is not an indicator of future performance.  

At times when markets hit intense volatility, investors can feel as though they’re in uncharted territory. The truth is that volatility has emerged before, and will no doubt feature again. Staying aware of current dynamics is essential, but what can also be useful is looking back to history to learn how others have dealt with downturns and difficult market conditions. What do some of the most prominent investors of all time have to teach us? 

Making friends with volatility: Warren Buffett 

Chairman and CEO of Berkshire Hathaway, Warren Buffett began investing as a teenager and is now one of the world’s richest people. Known as the “Oracle of Omaha”, he’s admired globally for his patient, value-driven approach to investing.  

Buffett manages volatility by treating it as a friend rather than a foe. His approach comes from the belief that market fluctuations aren’t a threat to long-term investors, but an opportunity to buy quality businesses at reasonable prices. He avoids being influenced by daily market movements and rarely sells in downturns. Instead, he maintains a cash buffer, allowing him to act decisively when others are panicking.  

During major market dislocations – such as the Global Financial Crisis and the onset of the COVID-19 pandemic – Buffett deployed capital into undervalued assets. By focusing on business fundamentals, long holding periods, and strong liquidity, Buffett is able to stay the course when others might lose confidence. 

Building a “margin of safety”: Benjamin Graham 

Benjamin Graham was a British-born American investor, economist and professor at Columbia Business School. Born in 1894, he’s known for writing The Intelligent Investor and mentoring Warren Buffett.  

Widely considered the father of value investing, Graham introduced the concept of a “margin of safety” as the key tool for managing volatility.  By buying securities well below their intrinsic value, Graham argued that investors could protect themselves from both market risk and their own mistakes. He also emphasised the need for emotional discipline in the face of market noise.  

Graham’s “Mr Market” metaphor illustrates the irrationality of short-term price movements – swinging wildly between optimism and pessimism. He taught investors to take advantage of these fluctuations, rather than follow them. His method provides a rational anchor in volatile conditions.  

Staying the course with total conviction: Peter Lynch 

Peter Lynch managed the Fidelity Magellan Fund from 1977 to 1990, delivering an average annual return of 29% over that period. He is also the author of popular investment books including One Up on Wall Street.  

Peter Lynch took a pragmatic approach to volatility, viewing it as an inevitable and manageable part of investing.  In fact, he publicly went so far as to say “I love volatility!”  As manager of the Fidelity Magellan Fund, Lynch often held hundreds of shares and expected many of them to fall during his time holding them. He didn’t see this as a failure – it was simply part of the journey.  

Lynch’s deep understanding of the companies he owned gave him the conviction to hold through downturns. Lynch also warned against trying to time the market, reminding investors that the biggest gains often come from staying invested during turbulent periods. 

As we can learn from just these three successful investors, volatility in markets is not something to be feared, but can give rise to a variety of opportunities for investors seeking long-term value.

Staying focused and disciplined, while developing an understanding of your own psychological barriers and blocks, can serve you well as you navigate difficult conditions. Past performance is not an indicator of future performance and as always, please do your own research and consider your circumstances.