Warren Buffett Warns to Stop Worrying About Market Volatility, ‘Short-Term Market Forecasts Are Poison’

Warren Buffett, the chairman and CEO of Berkshire Hathaway (BRK.A) (BRK.B) has spent decades cautioning investors about the dangers of short-term thinking in financial markets. In his widely read 1992 shareholder letter, he underscored this point with characteristic bluntness, stating, “Charlie [Munger] and I continue to believe that short-term market forecasts are poison and should be kept locked up in a safe place, away from children and also from grown-ups who behave in the market like children.” The comment reflects both his investment philosophy and his skepticism toward attempts to predict near-term market behavior.

The quote comes from a period when Berkshire Hathaway’s reported earnings were being heavily influenced by volatility in equity markets. Rather than focusing on temporary fluctuations or attempting to anticipate them, Buffett used the occasion to reiterate his long-standing view: markets are inherently unpredictable in the short run, and reacting to forecasts often leads investors to make decisions based on emotion rather than analysis. This perspective is consistent with Buffett’s broader approach, which prioritizes evaluating businesses on their long-term economic prospects rather than daily or quarterly price movements.

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Buffett’s authority on the subject stems from decades of experience managing Berkshire Hathaway through multiple economic cycles, including recessions, inflationary periods, market crashes, and sustained bull markets. At each stage, he and Vice Chairman Charlie Munger – his late, long-term business partner – emphasized that forecasting short-term moves is less productive than focusing on business fundamentals such as durable competitive advantages, quality management, and consistent cash generation. This method ultimately produced one of the most notable long-term track records in corporate history, giving extraordinary weight to Buffett’s critique of short-term forecasting.

The context of this statement is closely tied to Buffett’s philosophy of treating stocks as ownership interests in real businesses. By warning that forecasts are “poison,” he suggests that attempts to predict near-term price action can lead investors to abandon sound reasoning and adopt trading behaviors that resemble speculation. His reference to “grown-ups who behave in the market like children” points to the emotional tendencies — fear, impatience, and herd behavior—that often drive short-term market decisions.

This message has a timeless quality and remains relevant in modern markets, where forecasting continues to attract significant attention. In periods of heightened volatility or economic uncertainty, demand for predictions about interest rates, earnings trends, or market direction often increases. Buffett’s statement serves as a reminder that such forecasts rarely provide actionable insight for long-term investors and can instead encourage frequent trading, misguided risk management, or reliance on overly confident predictions.

Moreover, his stance aligns with academic research showing that short-term market movements are often indistinguishable from randomness, while long-term returns more closely track business performance. Buffett’s commentary reinforces the notion that investors benefit more from patience, discipline, and careful analysis than from trying to anticipate sudden market turns.

By dismissing short-term forecasts as harmful distractions, Buffett underscores a central principle of his investment framework: durable success comes from long-term thinking, not the pursuit of near-term certainty. His warning invites investors to focus on underlying economic realities rather than forecasts that offer the illusion — but not the substance — of predictive power.

On the date of publication, Caleb Naysmith did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com