I would follow Warren Buffett's advice and buy ASX shares after the market selloff

These buy-rated shares could be the type that Warren Buffett would buy during a selloff.

| More on:
a smiling picture of legendary US investment guru Warren Buffett.

Image source: Motley Fool Editorial

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

The share market can be a rollercoaster at times, with sharp drops often shaking investor confidence. But if history has taught us anything, it is that market downturns can present fantastic buying opportunities for long-term investors.

This is a belief that is firmly held by legendary investor Warren Buffett, who has consistently preached the value of buying quality stocks during turbulent times. He famously quipped:

Be fearful when others are greedy, and greedy when others are fearful.

With the ASX experiencing a selloff today, along with significant weakness in February, now could be a smart time to follow Warren Buffett's advice and scoop up high-quality ASX shares at a discount to what investors were willing to pay just a few weeks ago.

Why market selloffs create opportunity

Market downturns are often driven by short-term fear rather than a fundamental change in a company's value. However, history has shown that markets recover over time.

As a result, investors who buy shares in high-quality businesses during downturns and hold them for the long term have often been rewarded handsomely.

The ASX 200 index, for example, has navigated through numerous crises—including the Global Financial Crisis, the COVID-19 crash, and inflation shocks—only to reach new highs in the years that followed.

Buy like Warren Buffett

For those looking to capitalise on the market selloff, they might want to consider buying ASX shares with certain traits. These are strong business models, positive growth outlooks, sustainable competitive advantages, and talented management teams.

Four shares that could tick these boxes include CSL Ltd (ASX: CSL), Goodman Group (ASX: GMG), Pro Medicus Ltd (ASX: PME), and ResMed Inc (ASX: RMD).

All four are rated as buys by brokers at present and are tipped to rise strongly from current levels. This could potentially make them even more attractive during the selloff.

Goldman Sachs currently rates CSL shares as a buy with a $318.40 price target. It also thinks very highly of ResMed and has a buy rating and $49.00 price target on the sleep disorder treatment company's shares.

Elsewhere, the team at Bell Potter currently has a buy rating and $330.00 price target on Pro Medicus' shares and Citi has a buy rating and $40.00 price target on Goodman's shares.

All these price targets imply potential upside of greater than 20% for investors over the next 12 months.

Foolish takeaway

Market downturns can feel uncomfortable, but history suggests they are often the best times to invest. By following Warren Buffett's advice and focusing on high-quality businesses, investors can take advantage of lower prices and position themselves for strong long-term returns.

While no one can predict exactly when the market will recover, those who invest during periods of fear often end up reaping the rewards when sentiment improves. As Warren Buffett has shown throughout his career, patience and discipline are key to building wealth in the stock market.

So, rather than fearing the latest ASX selloff, I'd see it as an opportunity to buy great ASX shares for the long term.

Should you invest $1,000 in CSL right now?

Before you buy CSL shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and CSL wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 6 March 2025

Citigroup is an advertising partner of Motley Fool Money. Motley Fool contributor James Mickleboro has positions in CSL, Goodman Group, Pro Medicus, and ResMed. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended CSL, Goldman Sachs Group, Goodman Group, and ResMed. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended Pro Medicus. The Motley Fool Australia has positions in and has recommended ResMed. The Motley Fool Australia has recommended CSL, Goodman Group, and Pro Medicus. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on How to invest

Man looking amazed holding $50 Australian notes, representing ASX dividends.
How to invest

How to turn $10,000 into $100,000+ with ASX shares

Let's see how it could be possible to grow your money significantly with the share market.

Read more »

A young female investor with brown curly hair and wearing a yellow top and glasses sits at her desk using her calculator to work out how much her ASX dividend shares will pay this year
How to invest

5 quality ASX shares for beginners to buy

Analysts think these shares could be top buys for beginners. Let's see why.

Read more »

a line of job applicants sit on stools against a brick wall in an office environment, various holding laptops , devices and paper, as though waiting to be interviewed for a position.
How to invest

New to investing? Here's the smartest way to get started with ASX shares

It isn't as hard as you might think to become a successful investor.

Read more »

A large pet dog and a little baby boy are dreamily looking out their home window on a rainy day.
How to invest

Long term investing: 'The big money is not in the buying and the selling but in the waiting' – Charlie Munger

Patience is a virtue in investing, as in life

Read more »

a man leans back in his chair with his arms supporting his head as he smiles a satisfied smile while sitting at his desk with his laptop computer open in front of him.
How to invest

Worried about market timing? Try dollar cost averaging with ASX shares

This simple strategy can help remove the stress of investing and build significant wealth.

Read more »

Modern accountant woman in a light business suit in modern green office with documents and laptop.
How to invest

How ASX investors can tap into the rise of private credit

There are a few private credit investments listed on the ASX.

Read more »

Man holding fifty Australian Dollar banknote in his hands, symbolising dividends, symbolising dividends.
How to invest

How I would make $10,000 of annual passive income from ASX shares

It may not be as hard as you believe to achieve this goal.

Read more »

Legendary share market investing expert and owner of Berkshire Hathaway Warren Buffett
How to invest

Buying the ASX share dip: 'Price is what you pay, value is what you get' – Warren Buffett

The Oracle of Omaha has wise words that could help Aussie investors.

Read more »