In recent days, the stock exchange has been experiencing a crisis related to growing geopolitical risk and uncertainty. Stock market fluctuations can make investors nervous. But one investor who has made billions of pounds over decades thanks to nervous markets is Warren Buffett.

How did he do it?

Focus on facts, not fears

Part of Buffett’s success was separating market hysteria from facts.

Many people know what Buffett invested in American Express (NYSE: AXP) decades ago: Berkshire Hathaway still owns shares. Amex appears to be Buffett’s classic stock pick. It has a robust brand, a proven business model and long-term profit potential.

There are also risks involved. Weakening consumer confidence in the U.S. could lead to higher credit card default rates, hurting profits.

But fewer people know these days that Buffett bought when the market identified one risk as particularly noticeable and priced American Express stock accordingly.

This risk involved an accounting fraud involving vegetable oil that affected one of the company’s subsidiaries. Buffett correctly assessed that since the company was not involved in the fraud and the financial impact on the company was manageable, the stock price collapse was exaggerated. He used this as a shopping opportunity.

Quality always and without exception

Sometimes, however, a market crash can make it challenging to separate concerns from facts. A market decline can be self-fulfilling, weakening previously robust companies and ultimately sending them into oblivion.

This happened to some financial services companies during the 2007-2008 financial crisis. Some were poorly run companies, but others were probably just in the wrong place at the wrong time.

Such a market crash presented an opportunity – but also a risk. Buffett’s response was a masterclass on why he became a billionaire.

He was asked to invest in Bear Stearns, then a huge investment bank. He spent the evening reading the annual report. He saw enough warning signs from that alone to decide there was no need to spend any more time considering the idea.

That’s right: an annual report can actually be very useful. For a compact investor like me, this in itself is a very valuable lesson in Buffett’s behavior during the crisis.

But another is his investment Goldman Sachsbecause it shows how Buffett Always focuses on business quality.

Bottom fishing can be perilous

It sounds basic enough. Who doesn’t like quality business? The answer is: lots of investors!

In the event of a crash, when stock prices plummet, they may think that profits look better for a good business discounted to a rock-bottom price than for a great business at a merely attractive price.

Buffett has been around long enough to know that quality matters and it’s worth paying for. Recognizing that there were opportunities, but also threats, in the bombed-out financial sector of 2008, Buffett decided to separate the wheat from the chaff.

Working with Goldman for over half a century, he invested $5 billion on preferential terms and ultimately earned billions of dollars.

As in serene markets, Buffett didn’t look for the cheapest stocks he could buy. He wanted to buy a great business at an attractive price – and he succeeded.