Buffett Warns Investors Face 50% Stock Declines

Warren Buffett told investors to expect steep drops after buying stocks, as semiconductor funds also fell sharply in a recent selloff.

Updated on Nov. 7, 2026 in Investing

Bold flat-color editorial illustration of a steel shipping container stack with the top container tilted sharply downward over an empty drop, in deep red, cream, and charcoal, evoking a steep market decline. — Warren Buffett told investors at Berkshire Hathaway's 2020 annual meeting to expect 50% stock declines after buying and warned that borrowing and emotional decisions pose greater dangers than market drops. AI Illustration. Upload story photo >

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Warren Buffett said at the 2020 Berkshire Hathaway annual meeting that investors must be prepared for stock declines of 50% after purchase. Berkshire Hathaway's value declined by half on three separate occasions, according to the extraction.

Why it matters

Buffett identified borrowing and emotional decision-making as greater dangers to investors than temporary market declines. Recent volatility in AI-linked chip stocks has renewed attention on how investors respond to sharp drawdowns.

The iShares Semiconductor ETF (SOXX) fell 12.8% on Thursday while the Philadelphia Semiconductor Index dropped 12.3%, then SOXX rebounded 3.51% to close at $136.53 on Friday. The extraction does not say whether the rebound will hold.

The players

Warren Buffett

Warren Buffett is the chairman and CEO of Berkshire Hathaway, widely regarded as one of the most influential long-term investors in modern markets.

Donald Trump

Donald Trump is the current President of the United States, who has frequently commented on financial markets and retirement savings policy.

The details

Buffett said investors should not expect to identify every market bottom or time purchases perfectly, and should evaluate investing over 20- or 30-year periods. Reports indicate large hedge funds are facing liquidation during the selloff.

2020: Buffett makes remarks at the Berkshire Hathaway annual meeting.
Thursday, November 2026: AI-linked chipmakers suffer their worst selloff since the COVID-19 crash.
Friday, November 2026: SOXX recovers, closing 3.51% higher.

Market Dynamics

The semiconductor selloff is measured against the COVID-19 crash, the last period when AI-linked chipmakers saw a comparable decline. Buffett's advice to expect 50% drops reflects the long-term volatility he has seen repeatedly in Berkshire Hathaway's own history.

Retail and retirement investors holding semiconductor funds or broad equity exposure saw sharp short-term losses during the selloff. Buffett's guidance points toward evaluating holdings over 20- or 30-year periods rather than reacting to single-day moves.

The takeaway

Buffett's central warning is that borrowing and emotional selling do more damage to investors than temporary declines do. Evaluating holdings across multi-decade horizons is the approach he has consistently recommended.