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What the 1981 bear market taught Buffett about staying invested
An analysis of Buffett’s 1981 setback shows why patience through rate shocks, pessimism and volatility ultimately rewarded long term investors.
Warren Buffett’s 1981 experience highlighted how even disciplined value investors face painful drawdowns during aggressive interest rate hikes and deep market pessimism. Rising inflation, soaring bond yields and economic uncertainty battered equities, including Berkshire holdings. Buffett avoided panic selling, reinforced balance sheet strength, and stayed invested, later benefiting as valuations normalized. The episode underscored patience, liquidity discipline, and resisting macro noise as enduring advantages globally.