Over the course of several decades of investing in the stock market, Warren Buffett has had good and bad times. One of the many intriguing things about the billionaire’s career is how he actually managed to turn turbulent markets to his advantage.

This is not a coincidence. It reflects several elementary but powerful factors in Buffett’s approach. Fortunately, they can also work for private investors with a diminutive budget.

Having a strategic approach to investing

Buffett doesn’t enter a market crash by throwing all his investing rules out the window and treating the situation differently than he did during the boom.

Rather, he has developed a strategic approach to finding value in the market as a long-term investor and applies it in good times and bad.

This means that it is always prepared for turbulence, even if it comes unexpectedly.

Ready to act at miniature notice

Buffett has also long been able to act quickly. This is partly due to a strategic approach and often thinking through investment ideas long before you are ready to buy. But it also requires the ability to think quickly, rather than falling into so-called analysis paralysis.

Buffett has defined the parameters of his investments and is building a margin of safety. This means that it is able to move at high speeds.

Of course, it also helps that he often has plenty of liquid cash on hand to invest. Clearly, this is not possible for all of us.

However, I am considering this issue of sticking to cash rather than buying shares. I ask myself if I’m only buying a good idea now because the cash is burning a hole in my ISA rather than sitting on it and waiting for a great idea to come along later that I think is brilliant.

Distinguishing short-term challenges from bigger problems

Buffett sold his Tesco shares in 2014 in connection with accounting fraud in the company. He sold it at a large loss. Compare this to his long-term persistence as a leader American Express (NYSE: AXP). In fact, he only bought this share next disclosure of accounting fraud.

What was the difference? At Amex, this fraud caused stern financial damage in a miniature period of time. However, once a problem is discovered, it can be resolved and hopefully turn out to be a one-off.

Crucially, one of the company’s subsidiaries was a victim, but not a perpetrator. This is different in the case of Tesco, where the fraud directly affected the company.

Buffett was unable to assess whether there was more bad news at Tesco. That’s why he decided to cut his losses.

He feared that what he saw as a Tesco investment might be built on sand. Tesco eventually recovered, but as far as Buffett knew in 2014, it wasn’t inevitable.

In turn, the rationale for American Express’ long-term investment at the time of Buffett’s purchase remained largely unchanged from before: a prestigious brand, a proven business model, a vast customer base and excellent growth prospects.

Buffett assessed – correctly – that the scandal was a short-lived hit to profits, so the damage it did to American Express’s stock price was exaggerated.

History has proven him right – and to great advantage…

Is it worth investing £5,000 in American Express now?

If investing expert Mark Rogers and his team have stock advice, it can pay to listen. After all, Twelfth Magpie’s flagship Share Advisor newsletter, which it has run for almost a decade, provides thousands of paying members with the best share recommendations from across the UK and US markets.

Mark believes there are 6 standout stocks that investors should consider buying right now. Want to see if American Express made the list?

Christopher Ruane does not hold any position in the companies mentioned.