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How to Apply Warren Buffett's Principles With ETFs

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Key Takeaways

  • Buffett shrugs off trade-driven market volatility; S&P 500 ETFs like VOO could be a long-term pick.
  • Buffett worries about rising U.S. deficit. If left unchecked, we believe it could hurt the dollar and bonds.
  • Adapt investment strategy to emerging trends like AI, cloud and cybersecurity with ETFs like BUG and BOTZ.

Billionaire investor Warren Buffett — the Oracle of Omaha — is known for his value investing style. Many want to mirror the legend’s investing strategy and emerge a winner, having navigated the turbulent financial and economic waters.

We recently received Buffett’s valuable comments on the ongoing socio-economic transition at the Berkshire Hathaway (BRK.B - Free Report) annual meeting on Saturday. Warren Buffett also said he will soon ask the board of Berkshire Hathaway to have Greg Abel replace him as CEO at the year-end.

Based on his comments, below, we highlight a few ETF investing strategies for Buffett fans.

Market Volatility? Nothing Dramatic, Says Buffett

Despite the S&P 500 being down roughly 3% this year, and having fallen over 19% from its record high at its lowest, Warren Buffett remains unfazed. Speaking at the Berkshire Hathaway annual meeting, Buffett dismissed the recent market turbulence.

Buffett stated that recent market fluctuations over the past few weeks have not been something serious and do not qualify as a dramatic bear market. Buffett pointed out that his Berkshire Hathaway has endured much worse in the past.

Berkshire’s stock has declined 50% during three separate periods. In contrast, Berkshire shares are up 19% year to date and closed at a record high on Friday.Thus, you can definitely try Zacks Rank #1 (Strong Buy) Vanguard S&P 500 ETF (VOO - Free Report) with a long-term goal. 

Tariffs, Geopolitics and a Rebounding Market

Since the post-election surge under President Trump, the market has experienced volatility, largely due to evolving concerns over tariffs. After Trump's "Liberation Day" announcement on April 2, markets dipped, but recent rallies suggest that investors are no longer expecting the worst. By Friday's close, the S&P 500 had fully recovered from those losses.

Buffett on Trade: “It Should Not Be a Weapon”

The first question posed to Warren Buffett at the meeting centered on world trade, as global markets adjust to President Trump’s disruptive tariff policies. “Trade should not be a weapon,” Buffett stated during the meeting. Meanwhile, we also got some cues of trade de-escalation.

First Trust S-Network Future Vehicles & Technology ETF (CARZ - Free Report) is an ETF, which was initially beaten down by trade worries, but recovered soon on a temporary tariff pause (read: Auto ETFs Rise on Hopes of Tariff Exemptions).

Berkshire Cash Reserves Top $330 Billion

Buffett’s Berkshire ended the first quarter with more than $330 billion in cash — a record-setting stockpile. Investors continue to watch closely for signs of how and when Berkshire will put that capital to work. Berkshire is on the search for investments that make sense to the company and offer good value.

This shows that cash is still king, if you cannot find value in other investments. Investors thus can play the cash-like ETF PIMCO Enhanced Short Maturity Active ETF (MINT - Free Report) , which is off only 0.2% this year, while the ETF yields 5.14% annually.

Buffett Sounds the Alarm on Growing U.S. Deficit

When asked about former President Trump’s government efficiency initiative—commonly referred to as “DOGE”—Warren Buffett shifted the focus to a broader fiscal concern: rising U.S. deficit.

Buffett warned that the United States is running a fiscal deficit at an unsustainable level. It shows if the deficit can’t be managed soon, there are risks for the U.S. dollar and treasuries.

A persistently high deficit may weaken confidence in the U.S. dollar over time. Also, a large deficit may lead to increased government borrowing, pushing up interest rates and lowering bond prices.

Invesco DB US Dollar Index Bullish Fund (UUP - Free Report) and iShares 20+ Year Treasury Bond ETF (TLT - Free Report) could be at risk if deficits remain uncontrolled. However, with Trump looking to rein in that field, we believe UUP and TLT do not face any near-term risk. 

Buffett’s Investment Wisdom

Buffett shared two key pieces of advice for investors in light of recent market behavior:

Expect the Unexpected

Surprising events will always affect the world. The stock market is no exception. If you react emotionally—feeling euphoric when markets are up and fearful when they’re down—then the stock market might not be the right place for you.

Zacks Rank #1 (Strong Buy) Technology Select Sector SPDR ETF (XLK - Free Report) can be a good bet now, as the fund is down 6.6% so far this year. But the AI story is here to stay, and Big Tech is bound to make its mark—sooner or later—despite fears about the rise of low-cost AI companies like DeepSeek.

Adapt Your Philosophy, Not Your Goals

If it makes a difference to you whether your stocks are down 15% or not, you need to get a somewhat different investment philosophy,” Buffett said. He emphasized that the world won’t change to suit your investments—you need to adapt to it.

With the world now leaning toward AI, cloud and cybersecurity, investors may adapt their investing style accordingly. Global X Cybersecurity ETF (BUG - Free Report) , SPDR S&P Kensho Future Security ETF (FITE - Free Report) , Themes Cloud Computing ETF (CLOD - Free Report) and Global X Robotics and Artificial Intelligence ETF (BOTZ - Free Report) could be bought on this new market trend.

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