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Well that was a quick stock market crash…

Tristan Harrison

For the second time in very recent memory it seems as though the ALL ORDINARIES (Index: ^AXAO) (ASX: XAO) may recover after a very bad day yesterday. The S&P 500 went up 1.86% overnight. Although Friday on the US market could be another volatile day.

I think this goes to show that volatility is definitely back. Just because the market goes down almost 3% in one day doesn’t mean it’s the start of the next GFC. I bet ‘traders’ are loving it!

Anyone that sold their shares yesterday could be missing out on a potential recovery today. Panic selling is never the best way to go about things.

We are entering a phase of much higher volatility. This can be an opportunity if we’re brave to buy at the right time.

In-fact, this reminds me of a good Buffett quote about markets falling: “You shouldn’t own common stocks if a 50% decrease in their value in a short period of time would cause you acute distress.” We didn’t see a 50% fall, but you get the point. Yesterday was only 3%!

It’s not unexpected. Nor is it a bad thing. Interest rates were always going to go back up. And, like gravity, those rising rates will naturally hurt valuations in the shorter-term until they find a natural level.

Foolish takeaway

That’s why, if you’re investing in individual shares, you should mostly ignore what’s going on with other businesses (or the whole market) and just look at the value and fundamentals of your target. If you ignore all the noise and invest in that business at a decent value and hold for the long-term you’ll do okay.

Crashes come and go but quality growth shares are worth holding for many years. Some of the quality shares I’m thinking of are Citadel Group Ltd (ASX: CGL), Costa Group Holdings Ltd (ASX: CGC), Challenger Ltd (ASX: CGF) and REA Group Limited (ASX: REA).

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Motley Fool contributor Tristan Harrison owns shares of Challenger Limited and COSTA GRP FPO. The Motley Fool Australia owns shares of and has recommended Challenger Limited and COSTA GRP FPO. The Motley Fool Australia owns shares of Citadel Group Ltd. The Motley Fool Australia has recommended REA Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.