Days like today are where we see the full force of the media. Headlines like 'global bloodbath on the share market' abound, and you'd be forgiven for thinking the world is about to end, Judgement Day nigh.
But thankfully, it's not (to my knowledge anyway) and this period will pass, sooner or later.
But let's look at the facts.
Today marks the fifth day in a row that the S&P/ASX 200 Index (INDEXASX: XJO) (as well as the Dow Jones, Nasdaq, FTSE, DAX, Nikkei and pretty much every global stock index) has copped heavy losses.
Last week, the ASX 200 was sitting at 7,139 points (close to its record high).
Today, it sits at 6,489.7 points (at the time of writing). That's a 9.1% drop in a week.
We're getting very close to correction territory now (which is technically a 10% drop from a high), so it's certainly been a dramatic week.
How should we invest during these times?
Well, the undisputed expert on market crashes is none other than the great Warren Buffett. Here's a quote that I like to keep in mind when the market has a horror week:
"Big opportunities come infrequently. When it's raining gold, reach for a bucket, not a thimble."
When Buffett refers to 'raining gold', he is talking about big stock market falls – perhaps like the one we've had this week. That's because Buffett looks at the stock market as a market (imagine that). If the entire market's vendors are offering a 10% off sale, why wouldn't you buy as much as you could?
But instead, most investors have the tendency to join in and offer the vendors the goods they've already bought for 10% less. If you think that sounds foolish (and not the good kind of Foolish), you'd be in agreement with this writer.
So here's how I'm investing in the markets. Firstly, by not looking too hard at the value of the shares already in one's portfolio. You will find nothing but pain there.
Instead, have a look at the share prices of your favourite ASX companies. Chances are, you might find some that look like bargains. If the price is right, put your cash to work. As Buffett says, big opportunities come infrequently.
So don't let the doom-and-gloom headlines stop you from taking advantage or you might miss it. When the papers stop running headlines about the 'bloodbath' it will probably be too late.
