Warren Buffett, the Oracle of Ohama, needs no introduction.
His words of wisdom have long guided investors and will continue to do so for years to come.
I find his advice particularly sobering and insightful when the market faces challenges.
We find safety in numbers, and most seem comfortable following the crowd.
But for those willing to go against the flow, the opportunities can be immense.
The chairman and CEO of Berkshire Hathaway once said:
Don't pass up something that's attractive today because you think you will find something better tomorrow.
It's easy to look back and see opportunities we missed along the way in investing and life.
It's more difficult to retain composure when others are losing theirs and recognise what we have in front of us.
In the end, life is short, and really great opportunities are rare for most of us.
So, how do we capitalise on those opportunities when they present themselves?
First, we need to be able to recognise those opportunities.
Next, we need to act on them.
The stock market will go up, and it will go down.
We know this. But we must also remember it.
While fortunes tied up in the market rise and fall on a daily basis, history shows over time the chart gradually climbs.
So, it makes sense to buy when the price is cheap.
Seize the moment
To our rational side, that makes sense.
But we are also emotional beings.
Fear is a powerful force.
And when everyone else is jumping ship, we feel an urge to follow.
The rational side gives way to the emotional.
For intelligent investors like Buffett, when others are fearful, it is time to be greedy.
In 2008, amid the Global Financial Crisis, Buffett's Berkshire Hathaway acquired a 10% stake in Goldman Sachs.
At the time, in September 2008, shares in the bank were trading at around USD$150.
When Berkshire Hathaway sold its stake at the start of the pandemic in 2020, it collected a profit of around USD$3 billion.
It pays to keep your cool and act when you recognise a bargain.
The S&P/ASX 200 Index (ASX: XJO) has dropped by about 5% over the last few months.
Now is a good time to snap up shares in great companies at a discount.
If you do your research and keep cool, you will find bargains.
Otherwise, you could just buy into a good index fund.
