When stock prices are low, it is a good time to look for stocks to buy. But no one knows when the next stock market crash will come, so what should investors do in the meantime?

One strategy is to postpone purchasing and wait for opportunities. This may be what billionaire investor Warren Buffett has been doing lately, but it’s not the only strategy for most investors.

Warren Buffett

Many people have pointed out that Buffett’s investment tool Berkshire Hathaway Cash reserves have been building up recently. Although she made some investments, she sold more than she bought.

I think it’s always worth paying attention to what some of the more thoughtful investors are doing. But Berkshire has some unique reasons to hoard cash right now.

Sooner or later, the company will have to deal with the liquidation of Buffett’s shares by the charities to which they were left. The company does not want this to fall into the hands of activists.

New CEO Greg Appel suggested that the way to avoid this might be to buy it back in a private deal. Berkshire has done this before, but it cost about $165 billion.

Stock market crashes

A stock market crash can be a difficult experience. It’s no fun seeing something you bought sell for 20% cheaper a week later, especially if it’s part of your retirement plans.

When it comes to investment returns, stock market crashes are less important than you might think. The most important thing is what the core business does.

Every company, even the best ones, goes through difficult periods. But the best of them find ways to recover and that’s what makes them great long-term investments.

This means that investors do not need to wait for a stock market crash before considering buying stocks. What they need to do is find quality companies with strong long-term prospects.

A survivor of the FTSE 100

Contract catering company Compass set(LSE:CPG) is a great example. Lockdowns and travel restrictions mean… FTSE 100 index The company has been hit hard by the pandemic.

The stock price collapsed 36% as sales declined and the company barely managed to break even. But it has come back with a vengeance, with revenue and earnings per share now at record levels — and stocks have responded.

The main reason for this is the company’s size, which gives it lower costs than competitors. This allows it to deliver better value to customers while maintaining strong profit margins.

This is a long-term advantage that will not go away any time soon. So I think it’s a stock that investors could happily consider buying at today’s prices, even if a major pullback is imminent.

Opportunities

The way to prepare for a stock market crash is to own shares in companies that are likely to emerge stronger on the other side. This gives investors the best opportunities in the long term.

If artificial intelligence (AI) leads to the job losses that worry investors, Compass Group will find its business taking a hit. But this has happened before.

In this case, I expect weak demand to hurt higher-cost competitors more. So I think Compass may emerge stronger, which will ultimately lead to better investment returns.