Amid escalating tensions from trade tariffs and a resulting global stock market selloff, investment legend Warren Buffett advises: stay calm and focus on the long term.

Unlike the bullish market of 2024, the international investment landscape in 2025 has become increasingly volatile. Berkshire Hathaway, led by Buffett, made significant stock reductions in the fourth quarter of last year&mdashreflecting a cautious stance toward current market conditions.

Analysts believe Buffett&rsquos decision to reduce stock holdings was driven by three main concerns:

✦ Uncertainty in trade policy: The potential return of Trump-era trade policies may reignite tariff wars. Buffett has previously stated that tariffs are a form of &ldquoeconomic warfare&rdquo that only fuel inflation.
✦ Inflation and Fed policy: With U.S. inflation still above the Federal Reserve&rsquos 2% target, uncertainty remains high.
✦ Overvalued equities: After record highs in 2024, U.S. stock valuations are relatively elevated.Buffett&rsquos three main reasons for reducing stock holdings: trade war risks, inflationary pressure, and overvalued stock prices. (Photo credit: Pexels)

With markets now undergoing a correction, investors may find guidance in Buffett&rsquos 2017 letter to shareholders. In it, he quoted from &ldquoIf&rdquo, a classic poem written by British author Rudyard Kipling around 1895:

&ldquoIf you can keep your head when all about you are losing theirs...
 If you can wait and not be tired by waiting...
 If you can think &ndash and not make thoughts your aim...
 If you can trust yourself when all men doubt you...
 Yours is the Earth and everything that&rsquos in it.&rdquo

Buffett used this verse to emphasize the importance of staying calm and thinking independently during market turbulence. The key takeaway: don&rsquot let fear drive irrational decisions.