If Trump's Tariff Agenda Has You Afraid to Invest Right Now, Keep This Famous Warren Buffett Quote in Mind

Adam Spatacco, The Motley Fool

Fri, Apr 11, 2025, 6:45 AM 5 min read

We're just four months into the year and there's already been a multitude of events that have rocked the capital markets.

Back in January, a Chinese artificial intelligence (AI) start-up called DeepSeek shook investors to the core as the company claimed to build its models on older, less sophisticated IT architectures than American AI developers had been using. While these fears subsided relatively quickly, the market volatility continued thanks to mixed opinions on important economic data related to inflation and jobs reports.

Most recently, the event that has caused the biggest stir in the stock market is President Donald Trump's new tariff agenda. Since he announced his global tariff policies on April 2, stocks have been whipsawing so dramatically it's become both jarring and disorienting for investors to figure out what to do.

During times like these, a famous Warren Buffett quote always comes to mind. Let's assess the magnitude that the tariff news has had on the market. More importantly, we'll explore the mindset of the "Oracle of Omaha" -- which could help investors moderate any panic and fearful emotions they may be feeling right now.

The chart below illustrates the returns of both the S&P 500 and Nasdaq Composite so far this year. As I alluded to above, there have been multiple drop-offs across both indices throughout the first few months of 2025. However, the clear anomaly shown below is the precipitous decline that occurred in early April -- immediately after Trump's tariff policies became public:

The stock market is a fascinating case study in human psychology. It's a medium that reflects a wide range of emotions. When the markets are soaring, most people are euphoric. When the markets are crashing (like they are now), most people run for the hills.

But even during the so-called good and bad times, there exist a small cohort of people known as contrarians. These investors go against the grain; they don't adhere to mainstream ways of thinking.

When the stock market is roaring, a contrarian may become concerned that valuations are becoming disconnected from the performances of actual businesses. In other words, contrarians will think that people are investing more into narratives than concrete fundamentals. By contrast, when valuation levels drop, a contrarian may be inclined to start putting money to work as stocks become more attractive at their normalized prices.