^{Source: Bankrate}

When the stock market tumbles and headlines scream “crisis,” the temptation to panic is almost irresistible. But if you truly want to build wealth through investing, Charlie Munger — the late legendary vice-chairman of Berkshire Hathaway and Warren Buffett’s long-time partner — believed you need one crucial trait: emotional resilience.

In the wake of President Donald Trump’s sweeping tariff announcement that sent shockwaves through global markets, the S&P 500 dipped dangerously close to bear market territory — a 20% drop from recent highs. Investors braced for impact, worried that aggressive tariffs, particularly the 125% levies on Chinese imports, would reignite inflation and spark a global slowdown.

But then came a twist.

Just days later, Trump announced a 90-day pause on tariffs above 10% for over 75 trading nations (excluding China), injecting a brief jolt of optimism into the markets. The S&P 500 surged over 9% in a single day, one of its largest gains since the early 2020s.

It was a dramatic reminder that market volatility is not the exception — it’s the rule. And Charlie Munger knew this all too well.

The Reality of Long-Term Investing

In a 2009 interview with the BBC — just months after the financial crisis gutted portfolios — Munger didn’t mince words.

“It’s in the nature of long-term shareholding that the normal vicissitudes in markets means the long-term holder will see their quoted value drop by about 50% at some point,” he said.

In other words, if you’re investing for the long haul, you should expect — not just fear — periods of sharp decline.

That year, Munger’s own holdings in Berkshire Hathaway had been slashed by more than 50%, for the third time in his career. But when asked if he was worried about the company’s future, Munger interrupted the question.

“Zero,” he said.

His stoicism wasn't naivety — it was conviction born of experience. He and Buffett had weathered similar storms before, and each time, they stayed the course.

“Be Greedy When Others Are Fearful”

Munger and Buffett lived by a principle that has since become one of the most quoted investment mantras:

“Be fearful when others are greedy, and greedy when others are fearful.”

This mindset pushed them to consistently buy during downturns — when valuations dropped, fear was rampant, and many investors were fleeing the market. Historically, this approach has proven enormously successful.

Consider the aftermath of the 2008 crash. The S&P 500 dropped nearly 57% from peak to trough, but investors who held firm or bought during the dip saw the index triple in value over the following decade.

Or take the COVID-19 crash of 2020 — the market plunged 34% in just 33 days, only to recover fully within 6 months and reach record highs by 2021.

Volatility is the Price of Admission

Addressing students at the University of Michigan in 2011 — another year marred by debt ceiling debates and global market turbulence — Munger delivered a dose of tough love:

“You can count on more booms and busts over your remaining lifetime. How big and with what cyclicality, I can’t tell you. But the best way to cope is to put your head down and behave creditably every day.”

In other words, discipline beats prediction. Munger wasn’t trying to time markets. He was focused on consistently making sound decisions, ignoring the noise, and investing in what he believed in.

Great Fortunes Are Built During Downturns

Perhaps Munger’s most powerful advice came from his great-grandfather’s philosophy on opportunity:

“Real opportunities that come to you are few… most people just get a few chances in life when they can make a huge difference.”

These “lollapalooza” moments — as Munger called them — are rare. But when they show up, you can’t afford to be timid.

He urged investors not to sit on the sidelines, waiting for perfect conditions. When assets go on sale during a major correction, those are the wealth-building moments. You have to act — not hesitate.

“When you get a lollapalooza, for God’s sakes, don’t hang by like a timid little rabbit,” Munger said. “Don’t hang back.”

Lessons for Today’s Investors

With inflation showing signs of easing — falling to 2.4% in March 2025 from 2.8% the previous month — and markets responding positively to tariff pauses, some stability may return in the short term. But volatility is far from over.

Analysts like Peter Berezin of BCA Research are already sounding the alarm bells, predicting a recession beginning in April 2025, regardless of the tariff pause. He believes the damage is already in motion, and investors need to prepare for rougher waters ahead.

That’s where Munger’s timeless wisdom becomes more relevant than ever.

Whether you’re investing through a 401(k), dollar-cost averaging into index funds, or managing a personal portfolio of stocks — your emotional response to market dips will largely determine your long-term results.

Final Word: Invest Like Munger

If there’s one message to take from Charlie Munger’s decades of success, it’s this:

• Expect volatility. Don’t be shocked when markets swing.
• Stay consistent. Keep investing, especially when others panic.
• Seize rare chances. Big dips may be your best opportunity.
• Think long-term. The path to wealth isn’t linear — it’s turbulent.

As Munger himself said, “If you can’t handle the swings, you deserve the mediocre result.” Harsh? Maybe. True? Absolutely.

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