In this S&P/ASX 200 Index (ASX: XJO) market crash we find ourselves in, there has been plenty of investors who have decided to sell out of their ASX shares, or else 'wait for the bottom' before attempting (probably unsuccessfully) to buy back in.
This attitude may be misguided, but it is nonetheless very popular, and usually results in gross underperformance during bear markets.
But if we examine recent comments by a billionaire fund manager and investor, we might find ourselves an alternate route, and one that might deliver exceptional returns at that.
Billionaire investor and fund manager Alex Waislitz has just released the 'Chairman's Update' to the investors of the Listed Investment Company (LIC) he chairs – Thorney Opportunities Ltd (ASX: TOP).
In this letter, Mr Waislitz outlines the 'opportunity' he sees in this stock market crash – noting how his value-investing firm is primed to take advantage of market volatility:
"Thorney cut its teeth and established its reputation as a value investor in the years that followed the 1987 share market crash. We cemented that reputation after the collapses in 2000 and 2008," Waislitz stated in the letter.
He also added, "I would remind shareholders of the often-used adage that the Chinese Hanzi character for the word 'crisis' is made up of the characters for the words 'danger' and 'opportunity'."
Do other investors agree this market crash is an opportunity?
It's a very similar investment strategy to the one that legendary investor Warren Buffett often espouses. Buffett is not known as the master of value investing for nothing. Most of his major holdings were picked up in times of economic turmoil and have helped him achieve a rate of return in excess of 20% per annum on average for his company Berkshire Hathaway since he assumed control in 1964.
One of Buffett's more famous lines is "when it's raining gold, reach for a bucket, not a thimble". Stated in his 2010 annual letter to his shareholders, Buffett backed this up with this nugget of wisdom:
"We've put a lot of money to work during the chaos of the last two years (2008 and 2009). It's been an ideal period for investors: A climate of fear is their best friend. Those who invest only when commentators are upbeat end up paying a heavy price for meaningless reassurance."
See the similarities? Maybe great minds do think alike…
Foolish takeaway
I think the advice of both Mr Waislitz and (of course) Mr Buffett are well worth keeping front-of-mind as we navigate this crisis together as ASX investors.
It is a bleak time, but one that also might be rife with opportunities if you know where to look. Invest with both intelligence and rationality, and I think you will be more than okay when the dust settles!
