Veteran fund manager Tom Russo says volatile stocks are testing investors – and Warren Buffett may have bought the dip

Recent stock market volatility has rattled many investors, but it may have allowed Warren Buffett to buy the dip, Tom Russo told Insider in a recent maintenance.

Russo is the managing member of Gardner Russo & Quinn, an investment manager with approximately $15 billion in assets. He told Insider that the swings in stock prices over the past few weeks were as violent as any he’s seen in three decades of investing. Microsoft stock, which fell 5.5% on Jan. 24 before ending the day up 2.4%, was “bouncing like a cork on a choppy sea,” he said.

Resisting the urge to panic sell when stocks soar is no small feat. “It takes amazing discipline and stability under fire,” Russo said.

However, stubbornly holding a stock and watching its value evaporate can also be dangerous. “Stay on the wrong track for the wrong company can be absolutely wrong advice for an investor,” Russo said.

As the Federal Reserve prepares to cut economic support and raise interest rates, investors will have to tell which stocks are winners from losers after years of rising tides, Russo said. “Some companies were paddling underwater, some weren’t,” he noted.

While a volatile stock market presents new challenges, it also creates good business for brave investors who have done their research and aren’t afraid to hold a stock for the long haul. Russo described the opportunity as “pulling a gem out of a tumultuous environment”.

The S&P 500 in a nutshell tumbled into correction territory on Jan. 24, then made a strong comeback, ending the day in the green. Buffett, who was eager to deploy around $80 billion cash reserves at his Berkshire Hathaway conglomerate, may have landed a deal or two and helped the turnaround, Russo said.

Another opportunistic investor may have been responsible of course. For example, Bill Ackman started buying Netflix shares when they fell that day, and builds $1.1 billion stake over the next few days.

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