"Diversification is the only free lunch" — When Shark Tank’s Kevin O’Leary shared tips on Stock Market crashes

Over the years, Shark Tank fame Kevin O’Leary has invested in various companies, stocks, and cryptocurrencies, gaining extensive knowledge in the process. During an interview with CNBC Make It, released in October 2018, Kevin shed some light on Stock Market crashes and offered tips on dealing with them.

While he emphasized the importance of diversification, he advised investors to prioritize long-term investments. He noted that it has a proven track record of returns, allowing people to avoid stress over market fluctuations.

"Diversification is the only free lunch, but you should always be taking a portion of your savings and investing it for the long term," he said.

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Shark Tank investor Kevin O’Leary explains the benefits of investing long term

In a CNBC Make It interview, Kevin O’Leary advised against panicking when the market declines, emphasizing that the market won’t sympathize with investors. He cautioned against investing all of the funds into stocks and recommended diversifying investments.

According to the Shark Tank star, a portion should go into stock investment, while the rest should be allocated to fixed-income assets like bonds.

"Never cry when the market goes down, because it's not crying for you. What happens is you shouldn't have all of your money invested in stocks. That's too risky. You should have some of it. You also need some fixed income like bonds, and you need some cash," he said.

While Kevin acknowledged the importance of diversification in investing, he mentioned that individuals should allocate a portion of their savings for long-term investments.

"Look at your salary, try and save 10% every time you get paid. Think of all the cr*p you buy [that] you don't need. That can be put to work in the stock market. And over time you get 7 or 8% annualized over a long period of time," he explained.

The Shark Tank star stated that long-term stock investing has been providing good returns for the last 100 years and it will continue to do so for the next 100 years.

Kevin pointed out that most people today, especially younger investors, haven't experienced significant market downturns. Because of this, he believes that whenever the current generation is placed to deal with a market decline they react with panic or uncertainty.

He emphasized that investors planning long-term shouldn't worry as these downturns are a natural and expected part of market cycles.

"It's much better if you're an investor to think long term, buy companies that are profitable, that have good balance sheets, that pay dividends, and you can sustain yourself through these massive corrections," he adviced.

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Kevin O’Leary believes that timing the market is impossible

In an October 10, 2024 X post, Kevin shared his opinion on market timing and stated that it's impossible to predict the market’s movements. The Shark Tank star explained that if investors assume that the stocks they've bought are overvalued in price and they sell their holdings early, then they might miss out on significant gains in the next quarter.

Kevin advised that instead of trying to predict market highs and lows, investors should focus on diversification to minimize the risk and benefit from long-term growth.

"It’s impossible to time the market. If you thought stocks were overvalued, you would have sold two quarters ago and missed out on a huge part of this year’s gains. You can’t time the market, but what you can do is diversify and let the market do its thing," he wrote in the post.

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Shark Tank season 16 episodes air every Friday on ABC.