How Warren Buffett’s strategy can help investors to capitalise on a market crash

first_img Image source: The Motley Fool I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Our 6 ‘Best Buys Now’ Shares I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. “This Stock Could Be Like Buying Amazon in 1997” Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! Enter Your Email Address See all posts by Peter Stephens Simply click below to discover how you can take advantage of this. Warren Buffett has a long track record of capitalising on stock market downturns. As such, it could be a good idea for investors to follow his advice as the prospect of a second market crash remains strong.The ‘Sage of Omaha’s’ long-term approach and focus on high-quality companies may help him in identifying the best investment opportunities while other investors are selling stocks. Over time, this may lead to market-beating returns.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Warren Buffett’s long-term approachWarren Buffett’s time horizon is exceptionally long. In fact, his favoured holding period is said to be “forever“. As such, he is unlikely to become too concerned about a temporary decline in stock prices. A market crash may feel as though it could last in perpetuity. But the reality is that no market downturn has ever continued without eventually becoming a bull market.Therefore, adopting a long-term view may help an investor to look beyond short-term chaos in order to buy the best companies on offer. Certainly, it is extremely difficult to know when a market downturn will come to an end. However, indexes such as the FTSE 100 and S&P 500 have always recovered from their declines to post new record highs. Investors who purchase undervalued stocks and hold them for the long run stand a good chance of generating impressive returns as the economy recovers.If Warren Buffett took a short-term view of his portfolio, he would not be in a position to take advantage of a market crash. Instead, he would probably react to short-term market movements. This could lead to losses because of the unpredictable nature of stock prices over a short time horizon.Buying high-quality stocksWarren Buffett also buys high-quality companies in a market crash. They are more likely to overcome potential economic challenges and weak operating conditions than their peers. This may be because they have a more solid financial position or a clear competitive advantage. Furthermore, they may also be better placed to benefit from a likely long-term recovery. They may have a unique product, a dominant market position or lower costs than their sector rivals. This could all help their bottom lines to move higher at a faster pace.Through owning the most attractive businesses within a sector, an investor’s risks may be lowered and their return prospects could be improved. Therefore, it may be worth analysing companies within a specific sector to unearth the most attractive purchases that can deliver the highest returns in the long run.Warren Buffett has previously made relatively few purchases even during a market downturn. Therefore, it may be prudent to be selective when deciding which companies to buy. Doing so may lead to a better portfolio performance and a stronger recovery as the economy returns to positive growth in the long run. How Warren Buffett’s strategy can help investors to capitalise on a market crash Peter Stephens | Monday, 16th November, 2020 last_img

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