An astute investor like Warren Buffett would be licking his lips as ASX 200 shares enter a bear market. The S&P/ASX 200 Index (ASX: XJO) has fallen 17.74% lower since the start of the year and that has spooked some investors. However, those who have seen this before know that a market crash can be the best time to buy.
Think of ASX 200 shares as products in a store. If all of your favourite items were suddenly put on sale, you might go to the store and stock up for a bargain. That's how long-time investors like Warren Buffett would be seeing ASX 200 shares right now.
But how do you know when something is undervalued and which shares to buy today?
How to invest in ASX 200 shares like Warren Buffett
There are a number of ASX 200 shares that have crashed lower in March. Concerns over the COVID-19 pandemic have spooked investors into selling. But I am a big believer in Buffett's well known investing maxim, "be greedy when others are fearful and fearful when others are greedy." While other investors are panic selling right now, you could use some hard-earned cash to buy good quality shares on the cheap.
However, you have to be careful about which shares you pick. For instance, the ASX 200 travel shares like Webjet Limited (ASX: WEB) have plummeted drastically, but may not be undervalued. The impact of COVID-19 on travel bookings (and therefore earnings) is very tangible. I'd say the same for the major airlines and other ancillary businesses.
However, an ASX 200 share like Fortescue Metals Group Limited (ASX: FMG) may be in the buy zone. Fortescue shares are trading at a price-to-earnings (P/E) ratio of 3.73 times with a dividend yield above 10%. Those are some numbers that could scream buy to an investor like Warren Buffett. While COVID-19 has hit Chinese demand for Aussie minerals, that could bounce back quite quickly as the nation emerges from the outbreak.
It could be a similar story for a company like Ramsay Health Care Limited (ASX: RHC). The COVID-19 outbreak is likely to stretch Ramsay's medical resources to their limits, but could also be a positive for the group's earnings. Shares in the ASX 200 healthcare group were down 16.21% last week and another 6.8% in early trade, which could put them in a buy zone.
