Be fearful when others are greedy, and greedy when others are fearful
Buy When There’s Blood on the Street: The Power of Contrarian Investing
Warren Buffett is renowned for his ability to cut through the noise of the markets and find timeless truths. One of his most famous pieces of advice, borrowed from Baron Rothschild, is: “Buy when there’s blood on the street, even if it’s your own.” It’s a dramatic way of saying that the best investment opportunities often appear when everyone else is panicking.
But what does this really mean in practical terms? At its core, this principle encourages investors to go against the crowd. When markets crash and fear is at its peak, prices drop sharply—often beyond what’s justified by fundamentals. In those moments, stocks may be deeply undervalued, and for long-term investors, that presents a golden opportunity.
Let’s take March 2020 as an example. As the COVID-19 pandemic spread and economies shut down, markets plunged. Many investors sold in fear. Yet those who bought during the crash—when it felt like the world was ending—saw massive gains as the markets rebounded over the following months. The same pattern has played out in countless bear markets and recessions throughout history.
This strategy is not about timing the bottom perfectly. It’s about having the conviction to invest when sentiment is negative and valuations are low. Doing this requires discipline, emotional control, and a long-term mindset. It goes against human instinct, which naturally avoids risk and seeks safety during uncertain times.
Of course, buying during market chaos isn’t without risk. Some companies fail during downturns, and not every bargain is a good one. This is why it’s essential to invest in fundamentally sound businesses—those with strong balance sheets, durable competitive advantages, and proven management. The idea is not just to buy cheap, but to buy value.
“Blood on the street” moments don’t come often, but when they do, they can be life-changing for those prepared to act. It’s in these moments that fortunes are quietly made—when everyone else is selling and running for cover. This philosophy requires you to ignore the headlines, tune out the noise, and focus on the long-term potential.
In short, Buffett’s advice is a call for courage. The market rewards those who can stay calm when others panic. If you can develop the patience and nerve to act during downturns—when stocks are trading at discounts and fear is at a peak—you’ll be positioning yourself to reap the rewards when recovery inevitably comes.
