I'm fully invested. How can I take advantage of lower ASX share prices?

You've always got options with a well-diversified portfolio.

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As many investors would be aware by now, the Australian stock market has taken a historic drop so far this Monday. At the time of writing, the S&P/ASX 200 Index (ASX: XJO) has plunged by an eye-watering 4.43%. That has left the index at just 7,328.2 points. It might be a no-brainer time to start buying ASX shares if you've got some cash on the sidelines, Warren Buffett-style. But what about the Australians who are already fully invested?

The investing strategy of being 'fully invested all of the time' in ASX shares is a sound one in theory.

After all, the markets tend to go up far more often than they go down. And over the long term, the share market has never failed to exceed a previous all-time high. None of us know what the markets will do on a day-to-day basis.

As such, it makes sense to be invested as much as you can, as soon as you can.

However, this strategy comes with a price. One will have limited cash to invest when there is a market downturn. Or, as Warren Buffett might say, not being able to 'put out the bucket, not the thimble' when it's raining gold.

And boy, is there a market downturn right now. Including today's horrid 4.43% plunge, the ASX 200 is now almost 15% below its February all-time high of 8,615.2 points.

So, what should investors who are still fully invested do in a situation like the one we are now facing?

How to take advantage of lower ASX share prices if you're fully invested

Well, the only option for an investor who's fully invested and has no cash on the sidelines but wants to buy cheap shares is to sell existing shares.

Remember, shares don't fall uniformly in a market correction or crash. Some stocks, such as those in the tech, mining, or financial spaces, often sell down far more violently than others in, say, the healthcare or consumer staples sectors.

When investors are worried about an economic shock, they tend to bail out of shares that are expected to be hardest hit and into 'safe haven' stocks with defensive earnings bases.

To illustrate, the REA Group Ltd (ASX: REA) share price has tanked by 22.5% since 12 February. But the Woolworths Group Ltd (ASX: WOW) share price has actually risen by 0.95% over the same period. Similarly, Telstra Group Ltd (ASX: TLS)'s stock has risen 10.2%.

Telstra and Woolworths obviously don't offer the same kind of long-term growth potential that REA does. But investors also know that the profits of these companies are far less likely to take a significant hit if there's a global downturn coming compared to the property-exposed REA Group.

Changing horses mid-stream

Hence, let's say an investor holds Woolies or Telstra shares right now and is also eyeing REA Group after its recent share price dive. They could effortlessly sell out of the former shares (either fully or a portion) at no major cost to their portfolios and redeploy the funds into REA today.

Of course, many investors have a nasty habit of feeling like they just need to 'do something' on days like today. That is not the case. If your investing strategy has worked well in the past, there is no need to change it on a whim just because there is a major one-day sell-off.

However, it still pays to keep in mind that even if you are fully invested in ASX shares, you might still have buying options at your disposal.

Motley Fool contributor Sebastian Bowen has positions in Telstra Group. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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