Is a once-in-a-lifetime opportunity to buy cheap UK shares just around the corner?

Bubbles could keep on bursting in the markets, so I’m aiming for a cool head while searching for cheap UK shares to buy for the long term.

Image of person checking their shares portfolio on mobile phone and computer

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To me, cheap UK shares are those assigning their underlying businesses lower valuations. But shares are not necessarily cheaper just because their share prices have fallen. That’s because, in some cases, lower share prices can be justified if some of the value in a business has evaporated.

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Sifting for quality

Billionaire investor Warren Buffett has enjoyed a successful career sorting out the quality businesses from the damaged, failing, or so-so businesses. And he’s often most active with his stock-picking when many investors are shunning stocks because of economic and other concerns.

And we have some big shifts and events affecting markets right now. I’m thinking of the war in Ukraine, strong price inflation, rising base interest rates and other factors. And these are hard on the heels of the global pandemic, Brexit, and the rising trend of onshoring production among many businesses.

Meanwhile, big economies such as China’s could face difficulties ahead. In one potential scenario, it could see a bursting of its real estate (property) bubble. And that could export further pain to other economies around the world, such as ours in the UK.

So, in many ways, it seems unsurprising to see the recent deflating of several market bubbles. For example, high-priced US tech stocks have seen their valuations and stock prices crash, in many cases. And we’ve witnessed many UK growth and small-cap shares plunge lower this year.

Bubble-bursting is on the rise

Meanwhile, cryptocurrencies such as Bitcoin plunged a long way yesterday (Monday 13 June) and have been weak for some time. It’s easy for me to imagine a prolonged bout of bubble-bursting in other markets as well. For example, the property market in the UK has become detached from affordability for many people. Maybe that’s another area set to return back to historical norms.

It seems possible that bubbles will keep on bursting all over the place. And we could see a once-in-a-lifetime opportunity to buy cheap UK shares just around the corner.

But if the stock market does move meaningfully lower from where it is now, it could be a good time for lifelong investors to go to work. And for me, that means getting busy with my watchlist to sort the good businesses from the not-so-good, just like Buffett does. And that’s because the stock market’s long-term record is impressive, despite the multiple setbacks along the way.

Dealing with the shares I already own

However, some of the best stock opportunities could already be in my portfolio. One technique Buffett sometimes uses is to buy more of a stock if the price goes against him. But that’s only if he’s confident about his original investment thesis. And if he’s absolutely sure of the quality of the underlying enterprise and its attractive growth prospects.

Meanwhile, a chunk of my portfolio is dedicated to regularly investing in a range of index tracker funds. And the strategy for that part is much simpler. My plan is to carry on adding monthly investments, no matter what the markets do in the short or medium term.

Volatile markets can be challenging. But I reckon the best approach for me is to leave my emotions at the door and keep alert to opportunities — no matter what happens next.

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Kevin Godbold has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Should you invest the value of your investment may rise or fall and your Capital is at Risk. Before investing your individual circumstances should be considered, so you should consider taking independent financial advice.

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