It has been an odd and unnerving week in the stock market. While some investors may be experiencing such turbulence for the first time, one who is not is billionaire Warren Buffett.

Buffett has experienced multiple dramatic stock market swings over decades – and used them to his advantage.

As the stock market has swung around this week, I have been bearing in mind some of Buffett’s advice about such moments – one piece in particular.

Imagine the market knocking at your door daily

Buffett got the idea from his teacher Ben Graham and it is one I think is simple, but powerful.

He talked about a person called Mr Market. Nowadays we might also say Ms Market, but here I’ll just refer to him/her as ‘The Market’.

Each day (or at least each day the stock exchange is open), it offers to buy shares from you at a certain price – or sell you the same share at a similar price.

As an investor, you can buy, sell, or do nothing. Year after year, decade after decade, you have the same option.

Here’s why this idea is so powerful

That may sound like a pretty obvious insight. In fact, I do not think so.

Consider the property market, for example. In a tough market, you may list a property for months or years without finding a buyer.

In the art market, you may want to buy a painting. But there is only one and, no matter what you offer, its owner is unwilling to sell.

By contrast, the stock market allows you to buy, sell or simply sit out the storm, as you choose.

So, just because shares tumble in price does not mean an investor needs to do anything when The Market offers a price for selling or buying.

Instead, if they think the investment case is unchanged, they can simply sit back, ignore the market noise and take a long-term view. It is no coincidence that Warren Buffett has described his ideal holding time as “forever”.

Bargain hunting, when it suits you

Equally, an investor can go shopping for bargains when The Market offers a share at a much lower price than before.

This week, I did exactly that and took the opportunity of a sharp fall in price to add to my holding in Filtronic (LSE: FTC).

Over the past year, the share price more than doubled. On a five-year timeline, it has grown over 1,000%. That is the sort of performance even Warren Buffett struggles to achieve!

It reflects the company’s sales and profits growth due to a number of deals for its specialist communication equipment, notably from SpaceX. Last year, revenue leapt 56% while a net loss the prior year gave way to a £3.1m profit.

With the potential for further orders from SpaceX – which has invested in Filtronic – I reckon the business outlook is rosy. But the share price had risen sharply to reflect that.

So, when The Market suddenly offered a much cheaper Filtronic share price this week, I bit its hand off.

The heavy reliance on a single customer is a clear risk and could mean revenues slump if SpaceX stops ordering. So I want to buy at a price I think reflects such risks. Briefly, I had the opportunity!

With a small pot of savings set aside, there are several avenues to explore passive income opportunities. One of the most effortless is investing in dividend-paying companies. It’s a hands-off approach that lets time do the heavy lifting.

While it’s not a foolproof formula, many legendary investors have successfully tapped into this method. The key lies in following a few smart strategies to help tip the odds in your favour.

Cutting costs

Taxes can take a bite out of your investment profits, so finding ways to reduce that impact is a smart starting point. For UK investors, one of the most effective tools is the Stocks and Shares ISA.

This account lets you invest up to £20,000 a year without paying tax on any gains — a powerful advantage when building long-term wealth. Best of all, opening one is straightforward, with most high street banks and a range of online platforms offering easy access.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

The strategy

A solid passive income portfolio often strikes a balance between growth stocks and dividend-paying shares. Growth stocks offer the chance for higher capital gains, while dividends deliver a more consistent income stream — each brings something valuable to the table.

And here’s where the magic happens: reinvesting those dividends can spark the power of compounding, steadily accelerating returns over time.

Smart investors tend to spread their investments across different sectors and global markets, helping to cushion against industry slumps or regional downturns. Many focus on growth stocks to begin with, often achieving between 7% and 8% returns. Even a modest £5,000 investment could snowball into around £30,000 over 20 years. 

Adding just £200 a month along the way, and the pot could swell to £166,000 in that time. Shifting that into a portfolio with an average 7% yield would return yearly income of roughly £12,000.

The sooner one starts the better — imagine what it could deliver after 30 years?

What to look for

When building a portfolio for passive income, it’s important to consider where a company may be in 10 or 20 years. Will there still be demand for its products or services? Does it have a long history or reliable management? Is it in an industry with a sustainable future?

Consider British American Tobacco (LSE: BATS), a company that’s built a reputation for consistently delivering reliable and generous dividends. Even during challenging economic periods, it maintains a strong commitment to rewarding shareholders.

It has a consistently high yield, which, over the past 12 months, has fluctuated between 7% and 10.4%. Plus, its share price is up 35% in the past year, which is unusually high growth for a dividend-focused stock.

But its earnings have been volatile lately, with a £15.8bn loss in 2023 offset by a £2.73bn gain in 2024. It also faces significant risks from regulatory and legal challenges to smoking, most recently a £6.2bn charge in Canada. These challenges mean the company has an uncertain future. 

For this reason, it’s an example of a company that isn’t ideal for a long-term investment strategy. For that goal, it may be wiser to consider more sustainable dividend-paying companies like Aviva, HSBC, or National Grid.

Aston Martin Lagonda (LSE:AML) shares have continued to make headlines over the past two years. Investors were sold a fairly smooth path to profitability, but that simply hasn’t been the case.

In 2024, the company reported a pretax loss of £289.1m, widening from £239.8m in 2023. This was reported alongside a decline in revenue by 3% to £1.58bn. It was a painful year for the iconic carmaker, as wholesale volumes also fell 9%, reflecting supply chain disruptions and weaker demand in key markets like China.

Despite these setbacks, Aston Martin managed to achieve a rare positive cash flow in the final quarter of 2024. New product launches and improved sales of high-margin models drove this achievement.

Failing to impress the market

The company’s share price has mirrored its financial struggles, plummeting by over 96% since its flotation in 2018. As of April 2025, shares are trading near their 52-week low of 56p, down significantly from their year-peak of 172.8p in April 2024.

Rising debt levels, which ballooned to £1.16bn at the end of 2024, have compounded Aston Martin’s challenges. To address these financial woes, the company has cut jobs and scaled back production plans. Additionally, it has received continued financial backing from Lawrence Stroll’s Yew Tree Consortium, which recently increased its stake to 33% through a £52.5m investment.

Another promise

In 2023, Aston Martin Lagonda set ambitious financial targets as part of its turnaround strategy. Executive Chair Lawrence Stroll planned to achieve £2bn in revenue and £500m in adjusted EBITDA (earnings before interest, taxation, dividends, and amortisation) by 2024/25.

Initially, these goals were tied to selling 10,000 vehicles annually. However, CFO Doug Lafferty later expressed confidence that the company could meet these objectives with just 8,000 units per year.

However, this just hasn’t happened. The business is still making promising though. New CEO Adrian Hallmark has outlined plans for a “materially improved” financial performance in 2025, with expectations of positive adjusted EBITDA and free cash flow in the second half of the year. The launch of the Valhalla, Aston Martin’s first mid-engine plug-in hybrid, is expected to play a crucial role in this turnaround.

Now, the group plans to achieve revenue of £2.5bn and adjusted EBIT of £400m by 2027/28. However, given its historic struggles, it’s unclear whether it can acheive these targets.

High risk, high reward

I had previously been an investor in Aston Martin, but it’s not for me anymore. Aston Martin’s journey remains fraught with risks. What’s more, the company ships around 2,000 vehicles to the Americas on average. Trump’s tariffs put these numbers in peril. Finally, while management is taking steps to stabilise operations and improve profitability, the company’s long history of financial troubles and increasing reliance on external funding are huge concerns. I do think it’ll survive the year, but it needs a turnaround to guarantee its future.

There are lots of different ways to try and earn passive income, some more passive and income-generating than others.

The approach I use is to buy shares in proven blue-chip companies that pay dividends. With the stock market experiencing a lot of turbulence over the past couple of weeks, buying such shares now could prove more lucrative than just a short while ago.

With a spare £9,000, someone could use this approach to target a monthly passive income of £490 on average.

Here’s how!

Share price and yield are connected

How much passive income a share earns depends on two factors – the size of the dividend per share and what someone pays for that share.

For example, if a share pays a 5p dividend annually and an investor buys it for £1, the yield is 5%. But if that price halves and the investor buys more shares, he will earn a 10% yield for those shares even though the dividend per share is the same.

So, when the stock market pushes share prices down – as happened for many shares at some point this week – it can offer the opportunity of earning a higher yield.

Look out for the risks, not just the rewards

That presumes the dividend is maintained, which is never guaranteed. A tumbling stock market can reflect City nervousness about how businesses are set to perform. If they do badly, they may cut or even cancel their dividend.

To try and manage that risk, an investor ought to diversify their portfolio. And £9,000 is ample to do that.

It is also important to focus on buying into quality companies at an attractive share price and only then consider the yield, rather than just investing in high-yield shares without properly understanding them.

One share to consider

For example, asset manager M&G offers a 10.9% yield. But that alone is not why I think investors should consider it.

While M&G aims to maintain or grow its dividend per share each year, it may not. It has been battling with investors pulling more money out of its core business than they put in. A nervous stock market could exacerbate that trend, hurting revenues and profits.

However, I think it has some helpful tools in its arsenal.

It operates in a large market with resilient customer demand and has a customer base in the millions. It has a strong brand and a business model that has proven excellent at generating surplus cash, the stuff of which dividends are made.

Taking the long-term approach

My example presumes a lower average yield than M&G’s 8.5%.

That 8.5% is still well over double the FTSE 100 average, but I think it is achievable in the current market, where some blue-chip shares have tumbled in price. Indeed, the M&G share price is almost a fifth cheaper than at its high point last month.

Reinvesting dividends (known as compounding) can boost passive income streams for the long-term investor. Compounding £9k at 8.5% annually for 25 years, for example, should produce £490 of dividends per month.

A shorter timeframe could still work, although the target income would be lower.

Either way, a useful first step would be identifying a suitable share-dealing account or Stocks and Shares ISA through which to invest the £9k.

Tesco (LSE: TSCO) shares have taken quite a tumble, falling 17% in the last month alone. That’s big for a company many think of as one of the safer picks on the FTSE 100, but we all know the reason. 

In this volatile new world sparked by Donald Trump’s latest round of tariffs, even reliable, cash-generating businesses like Tesco are feeling the squeeze. Over the past year, the shares are now up just 6%, and that gain is fast evaporating.

For bargain hunters, this could be the opportunity they’ve been waiting for. Tesco’s price-to-earnings ratio has dropped to just 11.3. Just a few weeks ago it was trading closer to 15 or 16 times earnings.

Is this FTSE 100 star a bargain?

Meanwhile, the dividend yield has crept back up to 4.28%. Tempting as that may sound, nothing’s without risk in these mad times.

We got an early signal from Kantar on 1 April when it reported that annual sales growth at UK supermarkets had slowed to their weakest pace in 10 months.

There were promotions aplenty as retailers fought for shoppers’ wallets. Despite that, Tesco managed to increase its market share to 27.9% with sales of £9.68bn over the period. By contrast, Asda saw its sales fall 5.6%, so the competitive pressures are real and biting hard.

Tesco’s own update on 10 April was a mixed bag. While 2024 profits rose 10.6% to £3.13bn the board warned things might not be so rosy amid rising “competitive intensity” and the added cost of employer’s National Insurance hikes, Minimum Wage increases, packaging taxes, and more.

Commentators were split. Garry White at Charles Stanley was concerned by warnings that management expects profit will fall in the current year. “Tesco’s guidance could prove to be conservative, but it will be a while before we know”, he said.

Tesco facing margin squeeze

Aarin Chiekrie at Hargreaves Lansdown highlighted Tesco’s strong position and loyal customer base, suggesting that despite a “slight pullback in its share price of late, the underlying story looks good as revenue and profits motor higher”.

Even if the price war intensifies, customers should stay loyal “helped by the Aldi price match and Clubcard prices keeping customers loyal”, Chiekrie added.

The 13 brokers offering one-year share price targets have a median estimate of just under 395p. If that plays out, it would mark a healthy gain of more than 22% from current levels. 

Of the 16 analysts offering ratings, 10 say Strong Buy, three say Buy, and three Hold. Nobody’s calling it a Sell.

Broker predictions can never be relied upon, of course, and most will have been made before Trump lit the tariff fuse. The next year or two could be volatile for just about every stock, and Tesco won’t be exempt. If a recession takes hold, shoppers will feel the pinch and so will Tesco.

Still, with a lower valuation, decent dividend and market leadership, Tesco shares are worth considering today. As ever, investors should aim to hold for a minimal of five years, while hoping the outlook is a little brighter by then.

I always keep a list of shares I would like to own if I could buy them at an attractive price. During the market turbulence in recent weeks, I have bought some of those shares, such as JD Sports and Filtronic. Rolls-Royce (LSE: RR) is also on my list. But the Rolls-Royce share price has not yet fallen to a point where I think it is attractively enough priced to add to my portfolio.

Why not?

Thinking about risks and rewards

All shares offer (or appear to offer) some potential for reward, otherwise investors would not buy them.

But all shares also involve risk. In some cases that is far, far higher than in others. But it is important to remember that even the most stable of shares involves risks.

Rolls-Royce faces risks of external demand shocks

If you do not know what an external demand shock is, the past couple of weeks have provided a very helpful practical demonstration.

A demand shock is when a market for a product or service suddenly encounters less collective demand from would-be customers. That can be because of things it has done itself, such as raising prices or reducing its distribution.

But it can also be because of an external factor. Tariffs are one and they are certainly a risk for Rolls-Royce, given its global footprint.

But there are other potential external demand shocks that I see as risks for both revenues and profits at Rolls-Royce.

Pandemic-era travel restrictions illustrates this perfectly. Demand for civil aviation cratered, driving down demand for aircraft sales and servicing. Rolls-Royce lost lots of money — and its share price was in pennies.

A fundamentally attractive business model

How times change!

The Rolls-Royce share price has soared 471% in the past five years, even when allowing for a 16% correction since the middle of last month.

Fundamentally, I think there is a lot to like about the aircraft engine business. High technical and capital requirements act as barriers to entry, giving manufacturers pricing power. Rolls has a large installed base of engines, helping provide substantial servicing revenues.

It has a strong reputation and is also benefiting from increased defence spending by many governments.

I’m still not ready to buy…

But while those factors make the business attractive to me, I would only want to invest at a price I feel offers me sufficient margin of safety when considering the risks Rolls faces.

The current price-to-earnings ratio of 23 looks high to me, although it partly reflects City expectations of earnings growth.

At a couple of pounds a share, I would be happy with the margin of safety on offer – and quite possibly also at £3 a share if business performance stayed as strong as it has lately.

Currently, though, the Rolls-Royce share price is closer to £7. For now, it will remain on my watchlist but I will not be investing.

With a global trade war having kicked off earlier this month, the US stock market, along with other markets around the world, started crashing.

In the few days following President Trump’s announcement, both the S&P 500 and Nasdaq plummeted by over 10%. Meanwhile, looking at the international landscape, Hong Kong’s Hang Seng index cratered by almost 12% along with Japan’s Nikkei 225.

The UK and Europe seem to have fared a bit better, with the FTSE 100 only down 6% and the DAX shrinking by 8%, yet that’s still a painful tumble in less than 72 hours.

Since then, shares have started to bounce back as the US reversed course and implemented a 90-day pause on its tariff programme (excluding China). This volatility is obviously gut-wrenching. But could stocks be heading down further in the coming months?

Here’s what the forecasts say

Let’s zoom into where this all started – the US. The latest projections from The Economy Forecast Agency reveal that the S&P 500 could still be on a downward trajectory despite the recent bounceback. In fact, the index could reach as low as 4,434 points by July. If that’s true, then America’s flagship index could see another near-20% clipped off in the coming months.

The timeline certainly seems plausible. July’s the summer earnings season and would reveal the impact of trade disruptions either from the US or other markets like China. So should investors use the recent rally to sell up and buy back into the market in July?

While this may seem wise on paper, in practice, history’s shown countless times that trying to time the market is a losing strategy.

July could indeed be the ‘true’ bottom. But what if the trade war is resolved faster than expected? Then the bottom could be much sooner. Similarly, if negotiations fail, then a protracted trade war could drag stock prices even lower later than July. There’s simply no way of knowing right now.

A better way to invest during volatility

Instead of trying to throw money into the stock market at the lowest point, investors can likely achieve better results if they use ‘dollar cost averaging’.

Take Palo Alto Networks (NASDAQ:PANW) as an example. The cybersecurity enterprise has already seen close to 20% of its valuation wiped out since mid-February, even after enjoying a rebound. And with the shares still trading at a lofty price-to-earnings multiple of 87, the stock could continue to tumble from here.

The company manufactures its hardware products in the US. But don’t forget it’s reliant on a global supply chain, including sourcing components from countries like China, which are facing some of the steepest tariffs.

Having said that, cybersecurity isn’t something businesses can really skimp on, even during economic turmoil, giving Palo Alto flexibility to pass on the higher import costs to customers. After all, that’s exactly what management did in the last China trade war in 2018-2019.

Through dollar cost averaging, investors could buy shares today, securing a 20% saving versus a few months ago. Yet if the stock continues to fall, then there’s still capital available to buy more at an even bigger saving, bringing the average cost per share down. It may be worth considering.

JPMorgan Chase & Co. (NYSE: JPM) reported its first quarter 2025 earnings results today.

Reported net revenue increased 8% year-over-year to $45.3 billion. Managed net revenue was $46 billion, also up 8%.

Net income was $14.6 billion, up 9% compared to last year, while earnings per share grew 14% to $5.07.

Revenue and earnings beat expectations, sending the stock rising over 1% in premarket hours on Friday.

Net interest income was $23.4 billion, up 1% while non-interest revenue was $22.6 billion, up 17% from last year.

Prior performance

Diageo (LSE: DGE) shares were tumbling long before Donald Trump’s trade war rattled markets, but the uncertainty hasn’t helped one bit. 

Mexican tequila and Canadian whisky exports to the States would both take a beating, if those tariffs come through. The furore couldn’t come at a worse time for the global drinks giant. 

One of the FTSE 100’s proudest blue-chips has taken a right old beating. The Diageo share price is now down nearly 30% over the past year, and a hefty 50% over three.

Can this FTSE 100 flop fight back?

The problems run deep. The cost-of-living crisis has left shoppers reluctant to splash out on premium drinks. 

Diageo’s push into the premium end of the market has stumbled as a result, and stocking issues in key regions, especially Latin America, have only made matters worse. 

I’ve tried to see the brighter side, averaging down on the stock several times, but each time the shares have sunk lower. So has my mood. Well they do say alcohol is a depressant.

Sure, Guinness is the height of fashion but there’s a growing concern that younger generations simply aren’t drinking the way their parents did. 

That casts a long shadow over Diageo’s long-term story. Once seen as a solid, defensive pick, the company now looks anything but dependable.

In February, Diageo reported that net sales had dipped 0.6% to $10.9bn, and operating profit fell 4.9% to $3.16bn, with currency headwinds and shrinking margins both playing a role. 

While there were encouraging signs in North America, boosted by Don Julio and Crown Royal, that’s all up in the air. Tariffs appear to have scuppered hopes of building momentum in the second half of the year.

At least the valuation has come down to earth. Diageo now trades on a price-to-earnings ratio below 15, which feels cheap given where it used to sit. 

Rising yield, but is it good value?

The dividend yield is up to 3.86%, and forecasts suggest it could hit 4% in 2025. So, what might that mean for returns?

The 22 analysts covering the stock have a median one-year target of 2,547p. If they’re right, that’s a potential 24% gain from today’s price of 2,063p. 

Add in the yield, and investors could be looking at a total return of almost 28%. I’d love that to happen, but can’t see it today. Forecasts feel shakier than ever right now.

They say it’s darkest before the dawn, and maybe better days lie ahead. But any investor considering Diageo today must look past the share price slide and ask if they truly believe in the company’s future. The P/E ratio may be lower, but that doesn’t make it cheap.

Of the 25 analysts who’ve issued a rating recently, 10 labelled Diageo a Strong Buy, with another three rating it a Buy. Three said Hold. Only three said Sell. Their glass is half full, but after the losses I’ve suffered, mine feels half empty. I believe investors’ patience could be tested for a long while yet.

Any investor considering this stock must be ready to commit for the long haul, or sit this one out.

Wells Fargo & Company (NYSE: WFC) reported its first quarter 2025 earnings results today.

Total revenue decreased 3% year-over-year to $20.15 billion.

Net income grew 6% to $4.89 billion and earnings per share rose 16% to $1.39 compared to last year.

Earnings beat expectations while revenue fell short.

Net interest income decreased 6% while non-interest income was stable. Noninterest expense decreased 3%.

The stock dropped over 4% on Friday following the earnings announcement.

Prior performance