Buffett's test asks investors to decide before buying whether they could hold a stock through a severe downturn. Some of the market's strongest days have arrived during bear markets, making that decision harder to improvise once prices fall.
The S&P 500 has gained 13.3% so far in 2026.
Persistent inflation remains a source of market stress. So does U.S. national debt above $40 trillion. Concerns about an artificial-intelligence bubble add to the uncertainty, but none of these risks establishes that a crash is imminent.
Some of the S&P 500's strongest trading days have arrived while stocks were still in a bear market. That is the uncomfortable math behind Warren Buffett's long-standing advice: decide whether you can live with owning a stock for years before a selloff gives you a reason to flee.
A separate summary of Hartford Funds data for the first half of 2025 said that missing the S&P 500's five best days would have produced a 12.1% loss, compared with a 6.2% gain for an investor who stayed fully invested. This is a secondary account of the data.
Make the decision before a selloff
In Berkshire Hathaway's 1996 shareholder letter, Buffett urged investors to consider whether they would be willing to own a stock for a decade before buying it. A reproduction of the letter says investors unwilling to hold a stock for ten years should not buy it even for ten minutes. The reproduction is not an official Berkshire copy. Buffett's test asks whether the reason for owning a business can survive ordinary market turbulence, rather than depend on a rising share price.
When prices fall quickly, selling can feel like action and bring immediate relief. A decision made in panic can also pull an investor out of the market before a recovery. A time horizon set in advance gives investors a way to measure a drop against their original reasoning instead of treating the falling price as a verdict.
A U.S. national economic adviser said the administration did not intend to use inflation to reduce the debt burden. The 10-year Treasury yield was reported at 5.24% on October 1, 2026, versus 4.13% a year earlier, while market-based inflation compensation averaged about 2.36% annually over the coming decade.
Rebounds can arrive in bear markets
Hartford Funds reviewed S&P 500 performance from 1996 through 2025. It found that 48% of the index's best days came during bear markets, defined as declines of at least 20% from recent highs. Another 28% arrived in the first two months of bull markets. The remaining 24% occurred during the rest of bull markets. A bear market is a prolonged decline; a crash can unfold quickly.
The compounding example is stark. According to Hartford Funds, a hypothetical $10,000 invested in the S&P 500 in 1996 would have grown to $192,167 by the end of 2025. Missing the 10 best days would have cut that ending value by 56%, to $85,490. Missing 20 would have left $49,551. Missing 30 would have left $31,123. These figures cover one historical period, not a forecast. They show the cost of missing the market's best days, but do not prove every investor should hold every stock.
This long-term return analysis also examines the limits of using past results to judge future performance. The best days are difficult to identify in advance, and some have occurred while markets were falling.
Conviction needs a risk check
Hartford Funds' figures put bear markets in perspective. They have lasted about 9.6 months on average and brought an average decline of 35%. Bull markets, by comparison, have lasted around 2.7 years and produced an average gain of 112%. These are historical averages, not a schedule. A particular downturn may last less or more time than the average, and its decline may be milder or more severe.
Holding through weakness may preserve access to a recovery. Adding to a position can also increase exposure to that company and its risks. Buffett's advice is most useful when it prompts honest preparation, rather than a reflexive promise never to sell. Investors still need to consider whether a holding is diversified enough for their circumstances and whether they can bear losses without jeopardizing money they will need sooner.
A ten-year horizon frames a decision; it does not replace an assessment of the investment. Stocks can be volatile over short periods, and a long time frame does not make a single company safe or ensure a positive return.
The investment case and the potential downside both need to be tolerable before an investor buys. A market's worst days, by themselves, do not determine whether that case has changed.
