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Thinking like Warren Buffett: why I’d buy UK shares for the new bull market

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Investing in UK shares always carries a degree of risk. And as the pandemic rolls on the dangers for many British stocks are more elevated than usual. New Covid-19 cases are still emerging across the globe as dangerous virus variants spread. There is also the threat of rising inflation to think about and what impact this could have on the global economy.

Investors should certainly never buy UK shares using money they can’t afford to lose. But I for one plan to invest in British stocks for the new bull market. I build my Stocks and Shares ISA with companies I think will deliver decent shareholder returns beyond the short-to-medium term. And I think there are many top stocks that will have the strength to weather, or perhaps even thrive, during a bumpy economic recovery.

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The UK share price fightback

I’m a firm believer in buying UK shares after stock market crashes. My faith is built on quite solid foundations too, I think. Let’s look at the FTSE 100’s performance in the wake of the global banking crisis during the 2000s. The blue chip index soared 124% in value from the troughs of 3,512 points it hit during the 2008/2009 crisis to the all-time highs of 7,877 points struck in spring 2018.

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

Global stock markets rose strongly as economic conditions improved, corporate profits rebounded, and investor confidence flowed back into financial markets. They also leapt thanks to the massive support provided by central banks and governments. Additional rate cutting and stimulus packages launched during the current economic crisis bodes well for stock prices during this new bull market, too.

Wise words from Warren Buffett

Of course past performance is no indication of future returns. As I say, a prolonged public health emergency and rising inflation could hamper the scale of the economic recovery. Other macroeconomic problems like trade wars, Brexit, and escalating sovereign debt levels could hit UK share investor returns during the 2020s as well.

So far, though, stock markets have risen to overcome severe social, economic, and political challenges and deliver big returns. As investment guru Warren Buffett famously opined, “in the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.

Once again, I fully expect UK shares to rise strongly following the 2020 stock market crash. Its why I’ve kept investing in my Stocks and Shares ISA since last year’s market correction. I bought Coca-Cola HBC as I think that, despite intense competition, that sales should boom as broader consumer spending levels recover. I bought Games Workshop too as international expansion could deliver excellent long-term returns in spite of the growth of illegal 3D model printing. And there are many other top UK shares I’m looking at today.

A Top Share with Enormous Growth Potential

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Royston Wild owns shares of Coca-Cola HBC and Games Workshop. The Motley Fool UK owns shares of Games Workshop. 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.