Warren Buffett names 1 key move every investor should know

The stock market is in an unusual spot right now.

Major indexes, including the S&P 500, the Nasdaq Composite, and the Dow Jones Industrial Average, have all touched record highs recently.

Volatility in the tech sector has renewed talk of an AI bubble. Roughly 45 percent of fund managers named an AI bubble the biggest tail risk facing markets today, Reuters reported , citing Bank of America's July Global Fund Manager Survey.

Few investors have as much experience navigating that kind of uncertainty as Warren Buffett. He has a specific piece of advice for surviving the volatility that markets may be approaching. One recommendation he first laid out more than two decades ago has repeatedly proven correct.

What Buffett says every investor should know

In the late 1990s, as excitement around the internet sent tech stocks soaring, Buffett warned stock prices would likely fall in the years ahead. He argued that even industries capable of transforming society do not automatically make for strong investments, a distinction many investors ignored at the time.

"The key to investing," Buffett wrote in a 1999 essay for Fortune , "is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all, the durability of that advantage."

To illustrate his point, Buffett pointed to the airline industry, noting that although air travel had reshaped the world, 129 airlines had filed for bankruptcy in the prior 20 years. Transformative technology and profitable investing are not the same thing, and confusing the two is exactly what set up the dot-com crash that followed.

The dot-com bubble proved his point almost immediately. Despite the internet's undeniable impact on the world, many tech companies with record-breaking IPOs just years earlier went bankrupt in the early 2000s.

The lesson was not that the internet failed to matter, but that hype around an industry says nothing about whether any individual company inside it can defend its position over time.

What history says about surviving market downturns

Every downturn in market history shares a common trait: It separates companies that survive from those that don't. From the Great Depression to the dot-com crash to the 2008 financial crisis, thousands of companies, even ones that looked unstoppable at their peak, have gone under during tough economic stretches.