My plan of attack for the next share market crash

Markets have been choppy lately, with investors nervous about talk of an emerging AI bubble.

When volatility spikes like this, it is easy to worry about whether a bigger downturn is coming next. But for long-term investors, the most important thing isn’t predicting the next crash, it is having a clear plan ready for when it inevitably happens.

History shows that the Australian share market has always recovered from every correction, crisis, and crash to reach new highs. The investors who come out on top aren’t the ones who panic at the bottom, but the ones who stay calm, stay rational, and use the moment to buy quality ASX shares at far better prices.

Here’s how I plan to approach the next significant downturn.

Staying focused when the noise gets loud

The first part of my strategy is to ignore the emotional noise that surrounds a crash. When markets fall sharply, the headlines turn dramatic and it can feel like the rules of investing have changed overnight. But the long-term trend of the market has never changed. Every slump has been followed by a recovery, and the strongest ASX share gains often occur when fear is at its peak.

During a crash, my goal is not to react to short-term panic but to zoom out, keep perspective, and remind myself that volatility is the cost of being a long-term investor.

Buy the highest-quality ASX shares

A downturn is the best time to upgrade the quality of your portfolio. Rather than speculating on risky ideas, I would use a market selloff to buy outstanding businesses that rarely trade at attractive prices.

If the ASX fell sharply, I would be looking closely at shares such as ResMed Inc. (ASX: RMD), Goodman Group (ASX: GMG), Macquarie Group Ltd (ASX: MQG), and Life360 Inc. (ASX: 360). These companies have strong competitive advantages, solid balance sheets, and long growth runways that extend well beyond whatever short-term issues are causing the crash.

ResMed remains a global leader in sleep apnoea treatment with a market measured in hundreds of millions of patients. Goodman continues to benefit from demand for logistics hubs and data centres. Macquarie has proven its ability to thrive in volatile markets thanks to its diversified global earnings base. And Life360 has become one of the most widely used family technology platforms in the world with rapid subscription growth.

If their prices fell materially in a downturn, I would be eager to add them to my holdings.

Looking internationally

If the selloff extended beyond Australia and global markets also fell, I would turn my attention to international ETFs.

Three stand outs for long-term buying are the BetaShares Nasdaq 100 ETF (ASX: NDQ), the iShares S&P 500 ETF (ASX: IVV), and the BetaShares Asia Technology Tigers ETF (ASX: ASIA).

The BetaShares Nasdaq 100 ETF provides exposure to America’s biggest technology innovators, the iShares S&P 500 ETF offers access to the world’s top 500 companies, and the BetaShares Asia Technology Tigers ETF taps into the fast-growing tech giants of Asia.

If global markets experienced a major shock, these ETFs would provide diversified exposure to world-

Foolish takeaway

Market crashes feel uncomfortable, but they are also when the best long-term opportunities appear. My plan is to stay calm, ignore the noise, and use the volatility to buy high-quality ASX shares and ETFs at a discount.

The post My plan of attack for the next share market crash appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in BetaShares Nasdaq 100 ETF, Betashares Capital – Asia Technology Tigers Etf, Goodman Group, Life360, and ResMed. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended BetaShares Nasdaq 100 ETF, Goodman Group, Life360, Macquarie Group, ResMed, and iShares S&P 500 ETF. The Motley Fool Australia has positions in and has recommended BetaShares Nasdaq 100 ETF, Life360, Macquarie Group, and ResMed. The Motley Fool Australia has recommended Goodman Group and iShares S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.