Why cheap hamburgers could give beginner ASX share investors food for thought

Warren Buffett's food advice could have important implications for investing in today's markets.

Three young women sit side by side each holding large hamburgers with the lot skewered with bamboo sticks in their two hands with wide, happy smiles on their faces as they look at their hamburgers just before they are about to tuck into them.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • This could be a good time for beginners to go hunting for ASX shares
  • Buying burgers at the supermarket at a cheaper price is better than paying full price. It’s a similar concept with shares
  • Plenty of ASX shares are now at much lower prices

It could be tricky for a beginner investor to know when to start investing in ASX shares.

Negative headlines sell. They attract a lot of attention and website clicks. When share markets are falling, there are regular fear-evoking headlines that talk about how many billions of dollars the share market has dropped on any given day.

But what if the worst days for falls are actually among the best days for buying ASX shares?

Let's look at the share price graph for REA Group Limited (ASX: REA) or Xero Limited (ASX: XRO) and ask which time periods appeared the best time to buy. It would seem to me, on a graph, that market crashes provide the cheapest buying opportunities.

So, that's why I believe this period — amid elevated inflation and rising central bank interest rates — could prove to be an opportune time to buy ASX shares.

But let's look at some very wise advice from legendary investor Warren Buffett who once compared shares to buying hamburgers.

Hamburger discount

Buffett said:

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.

To apply that quote to today's situation, many ASX shares are now close to the cheapest they've been in over two years, but many investors seemingly don't want to buy them anymore.

How does this apply to beginner investors for ASX shares?

Investing is about choosing investments that have compelling long-term futures, yes.

But, an important part of investing is 'buying low'. How can someone make a gain on their investment if they significantly overpaid or bought at the price peak in the first place?

Paying a good price is key for good long-term returns.

While it's impossible to say when share prices will go lower (or higher), we can evaluate the potential investments that are in front of us. Is this business that we're looking at valued attractively for long-term investment?

At the moment, I'm seeing lots of opportunities, which I have written about recently, including Brickworks Limited (ASX: BKW), Reece Ltd (ASX: REH), Beacon Lighting Group Ltd (ASX: BLX), Baby Bunting Group Ltd (ASX: BBN), City Chic Collective Ltd (ASX: CCX), and Adairs Ltd (ASX: ADH).

This certainly seems like a good time to be buying hamburgers for the long term.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended ADAIRS FPO, Brickworks, and Xero. The Motley Fool Australia has positions in and has recommended ADAIRS FPO, Brickworks, and Xero. The Motley Fool Australia has recommended Baby Bunting and REA Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Opinions

A set of scales with a bag of money balanced against a timer, indicating growth versus value shares
Opinions

Which ASX sector offers the best value heading into earnings season?

I think one sector is particularly compelling.

Read more »

Person holding a blue chip.
Blue Chip Shares

4 ASX 200 blue-chip shares to hold but not buy: experts

These blue-chips are worth holding if you already own them, but are too expensive for new investors to buy.

Read more »

young woman reviewing financial reports at desk with multiple computer screens
Opinions

Brokers' verdict on 4 popular ASX 200 financial stocks

Financials outperformed every other sector in FY25. What should you do now with these 4 stocks?

Read more »

share buyers, investors, happy investors
Opinions

Why it could be a great time to buy AFIC shares

I’m optimistic about the return potential for this investment company.

Read more »

a couple clink champagne glasses on board a private aircraft with gourmet food plates set in front of them. They are wearing designer clothes and looking wealthy.
Opinions

Why I'm aiming for $1 million with ASX shares

I think it makes a lot of sense to invest in stocks to achieve wealth goals.

Read more »

Man ponders a receipt as he looks at his laptop.
Opinions

3 reasons why the Xero share price could be a strong buy

This stock has all the hallmarks of a long-term winner.

Read more »

Happy miner giving ok sign in front of a mine.
Opinions

Which ASX 200 stock offers 'material upside' amid continuing uncertainty over US tariffs?

Blackwattle Investment has identified one ASX 200 large-cap stock that is thriving on the uncertainty.

Read more »

A woman sits at her computer with her chin resting on her hand as she contemplates her next potential investment.
Financial Shares

2 rising ASX financial shares with 'meaningful upside' still left: fundie

Financials outperformed every other sector in FY25, but there are still buying opportunities left, say these experts.

Read more »