There are not many times in the past decade that the S&P/ASX 200 Index (ASX: XJO) has fallen by 10% or more in a relatively short amount of time. It's close to that level of decline now. I believe Warren Buffett has plenty of useful advice for investors worried about an ASX share market correction.
Firstly, I think it's important to remember that it's normal for share prices to go down – they don't go up every single day forever. For the chance of share prices going up, we must be open to the fact that they can go down occasionally, too.
But, no one wants to see their portfolio go down in value, right?
As legendary investor Warren Buffett once said:
Be fearful when others are greedy and greedy when others are fearful.
This is not the right time to sell, on a long-term view, in my opinion.
We'd need a crystal ball to know how and when the Middle East conflict will be resolved, but I'm hopeful things will start improving sooner rather than later.
For investors nursing a painful portfolio hit, I'd say history shows that troubles like the GFC and COVID-19 can fade into the distance. That's partly because governments and other authorities actively try to mitigate and resolve the problem.
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Why I'm following Warren Buffett's advice and investing in ASX shares
The Sage from Omaha has given out plenty of advice, which is very applicable at times like this.
In the 1997 annual letter to shareholders, Warren Buffett wrote why share buyers can feel optimistic about potential opportunities:
If you expect to be a net saver during the next five years, should you hope for a higher or lower stock market during that period?
Many investors get this one wrong. Even though they are going to be net buyers of stocks for many years to come, they are elated when stock prices rise and depressed when they fall.
Only those who will be sellers of equities in the near future should be happy at seeing stocks rise. Prospective purchasers should much prefer sinking prices.
Another of my favourite Warren Buffett quotes came from 2001 when he related shares to hamburgers:
To refer to a personal taste of mine, I'm going to buy hamburgers the rest of my life. When hamburgers go down in price, we sing the 'Hallelujah Chorus' in the Buffett household. When hamburgers go up in price, we weep. For most people, it's the same with everything in life they will be buying — except stocks. When stocks go down and you can get more for your money, people don't like them anymore.
There are numerous ASX shares now trading at much lower prices worth biting into. Some businesses may see their earnings impacted in the next 12 months, while others may have resilient demand. In both situations, I think there are major opportunities for investors to take advantage of because share prices have declined too far.
Earlier in March, I put some money into Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares and other names. I'm now on the hunt for more opportunities after the dip, and I'd invite readers to identify some great businesses at unmissable value.
