Warren Buffett: His 2 Top Lessons From the Pandemic

Warren Buffett’s two top lessons from the 2020 pandemic can guide investors during the health crisis. Don’t lose sight of your long-term goals and invest in great assets like Canadian Imperial Bank of Commerce stock.

| More on:

Warren Buffett has been investing for 79 years. The once reject of Harvard Business School is 90 years old yet still steering Berkshire Hathaway in the COVID world. The legendary investor admits to learning two lessons from the pandemic.

In the recent virtual Goldman Sachs 10,000 Small Businesses event, Buffett bared his thoughts on the 2020 health crisis. He compared the pandemic that rocked the world to a hurricane. Still, the GOAT of investing maintains his unwavering faith in America.

A challenge facing small businesses

According to Buffett, the scale of the pandemic is a threat to small businesses. He said, “You’ve run into a headwind. It’s more like a hurricane in a country that’s generally supplied a tailwind to entrepreneurs and to its citizenry in general.” The Berkshire chairman added that small businesses generally need plenty of help. Whether the administration is Democrat or Republican, it must go to work to help small businesses, because they are the country’s future.

Efforts to stabilize the economy

Buffett also praised the Federal Reserve’s efforts to stabilize the U.S. economy. He said, “They did exactly what they should have done because we were developing truly major problems in financial markets.” The value investor likes the rapid response when COVID-19 struck in spring. He was quoted as saying, “The clouds will go away. The government should help them go away and in a hurry.”

Same challenge and response in Canada

Small businesses are also the heart of communities in Canada, because they create jobs and grow economies. However, the pandemic hit them hard. As of October 2020, the $12 million Canada United Small Business Relief Fund has been available to support Canadian businesses across different sectors and industries with grants of up to $5,000.

The federal government responded swiftly to combat the pandemic. On March 25, 2020, parliament passed the COVID-19 Emergency Response Act (Bill C-13) that contains various emergency relief measures. New legislation (COVID-19 Response Measures Act) followed on October 2, 2020, creating three new temporary recovery benefits to support Canadians. The Employment Insurance (EI) system got a facelift, too.

Invest in great companies

Here is Warren Buffett’s advice when investing in challenging times: “If you owned the businesses you liked prior to the virus arriving, it changed prices, but nobody’s forcing you to sell.” He said do not lose sight of your long-term goals if your investments are in great companies that can manage adversity and hardship much better than mediocre ones.

Canadian Imperial Bank of Commerce’s (TSX:CM)(NYSE:CM) sturdy balance sheet and strong financial position allows it to endure prolonged economic meltdowns. One piece of proof is CIBC’s 152-year dividend track record. The fifth-largest bank in Canada has been paying dividends since 1868.

On March 23, 2020, bank stock tanked to $64.42, but the share price has risen since. At present, shares of CIBC are trading at $109.48 — a 70% rally from its COVID-low. If you invest today, the dividend yield is 5.84%, while the payout ratio is 67.44%. This blue-chip asset can be a core holding in your stock portfolio.

Sagely wisdom

Warren Buffett’s nuggets of wisdom are guides for investors. The man has been through the worst recessions and is now navigating the current pandemic. It would not hurt to heed his investment advice.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Christopher Liew has no position in any of the stocks mentioned.

More on Investing

The virtual button with the letters AI in a circle hovering above a keyboard, about to be clicked by a cursor.
Tech Stocks

Emerging Canadian AI Companies With Big Potential

These tech stocks are paving the way to an AI-filled future, but still offer enough growth ahead for a strong…

Read more »

Young Boy with Jet Pack Dreams of Flying
Tech Stocks

Is Constellation Software Stock a Buy, Sell, or Hold for 2025?

CSU stock has long been a strong option for high growth, high value stocks. But are there now too many…

Read more »

rising arrow with flames
Investing

2 Riskier Stocks With High Potential for Canadian Investors in November

Risky stocks such as Well Health Technologies have the potential to provide life-changing long-term returns.

Read more »

hand stacks coins
Dividend Stocks

3 Ultra-High-Yield Dividend Stocks You Can Buy and Hold for a Decade

These three high-yield dividend stocks still have some work to do, but each are in steady areas that are only…

Read more »

senior man and woman stretch their legs on yoga mats outside
Dividend Stocks

TFSA: 2 Canadian Stocks to Buy and Hold Forever

Here are 2 TFSA-worthy Canadian stocks. Which one is a good buy for your TFSA today?

Read more »

Canada day banner background design of flag
Investing

Got $500? 5 Top Canadian Stocks to Buy and Hold

These top Canadian stocks have solid fundamentals with potential to outperform the benchmark index by a wide margin.

Read more »

man touches brain to show a good idea
Energy Stocks

1 No-Brainer Energy Stock to Buy With $500 Right Now

Should you buy a cyclical energy stock at its decade-high? Probably not. But read this before you make a decision.

Read more »

Asset Management
Stocks for Beginners

TFSA: 4 Canadian Stocks to Buy and Hold Forever

Thinking about what to buy with the new TFSA contribution space in 2025? These four Canadian stocks are worth holding…

Read more »