Charlie Munger's Brutal Truth For Investors: 'If You Can't Handle A 50% Drop, You Deserve A Mediocre Result'

The stock market just delivered another gut punch—and Charlie Munger saw it coming years ago. The S&P 500 plunged over 10% in just two days earlier this month, following President Donald Trump's announcement of new sweeping tariffs. 

The nosedive briefly pulled the index into bear market territory before a 90-day pause on some tariffs helped stocks bounce back. Still, Wall Street remains on edge as fears of a prolonged trade war swirl.

Munger’s No-nonsense Mindset Still Holds Up

Munger, the late vice chairman of Berkshire Hathaway, wasn’t one to sugarcoat market realities. In a 2009 interview with the BBC, Munger said, “If you can’t handle a 50% drop, you deserve a mediocre result.” 

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He referred to real losses—Berkshire’s stock had fallen by more than 50% during the 2008 financial crisis.

When asked whether he was worried about the decline of the company’s share price, Munger cut in with a firm, “Zero.” That wasn’t the first time he and Buffett had seen their holdings plunge. “This is the third time that Warren and I have seen our holdings in Berkshire go down, top tick to bottom tick, by 50%,” he said.

Munger’s approach? Stay calm and keep buying. He and Buffett followed a familiar mantra: “Be fearful when others are greedy, and be greedy when others are fearful.” Business Insider reported March 26 that Berkshire shares are up 16% so far in 2025, defying the broader market decline.

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Tariffs Stir Panic, Analysts Weigh In

The market chaos started the week of April 1, after Trump introduced new tariffs to curb China’s economic influence. While the 90-day pause helped spark a rally, analysts aren’t breathing easy. 

On March 31, Goldman Sachs projected a 35% chance of further market declines over the next year, as reported by Reuters.

Investors, meanwhile, are split between fear and opportunity. A survey published by Investopedia found that 73% of investors are worried about market volatility, but just 17% have shifted to safer assets. 

A majority—58%—said they are buying the dip, focusing on popular tech stocks like Apple and Nvidia.

Still, caution flags are up. An economist at GlobalData TS Lombard, Daniel von Ahlen, told Business Insider, “Trump’s tariff reprieve has triggered a relief rally in equity markets, but we think it will be short-lived and recommend selling into rallies and staying away from buying the dip,”

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History Favors The Patient

Market downturns may be brutal, but history shows they often set the stage for growth. According to a January 2023 report from Winthrop Wealth, the S&P 500 has endured 13 bear markets since 1929. In each case, the index recovered strongly over one-, three-, and five-year periods.

Munger preached this lesson to students during a 2011 appearance at the University of Michigan. “You can count on more booms and busts over your remaining lifetime,” he said, urging them to “just put your head down and behave creditably every day.” 

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