Volatility has gone through the roof.

Fear is out of control.

Investors don’t know which way is up. And no one is quite sure what comes next.

But don’t let that fear drive you out of the market. Instead, take advantage of it – just has other wealthy investors have done.

Sir John Templeton would tell investors to buy excessive pessimism.  

Warren Buffett still advises that a “climate of fear is your friend when investing; a euphoric world is your enemy.”  And of course, we all remember his advice to “be fearful when others are greedy and greedy when others are fearful.”

Baron Rothschild would tell investors, “The time to buy is when there’s blood in the streets, even if the blood is your own.”  He knew that very well, considering he made a small fortune buying the panic that followed the Battle of Waterloo against Napoleon.  

If you can spot fear, as they did, you stand to make a fortune.

Also, in times of chaos, have cash on hand.

“Cash, though, is to a business as oxygen is to an individual: never thought about when it is present, the only thing in mind when it is absent,” says Warren Buffett.

Rule No. 2 — Don’t Follow the Herd 

One of the key reasons that many investors underperform in the market is because they move in and out of assets at the wrong time. 

When an investor sees everyone else making money from rising markets, that’s when they tend to throw every spare dollar into their investments. Unfortunately, when that same investor sees a group of other investors selling, the investor sells, too. 

In short, they get caught up in herd mentality.

A trader will often mimic the actions of a larger group so they don’t feel left out of a trend, or miss what the herd believes is a “can’t lose” trade.

The rationale is simple. 

It’s unlikely that such a large group of people can be so wrong. 

Rule No. 3 — Be in a Strong Position to Capitalize

With cash on hand, Buffett has the financial flexibility to jump on opportunities that popped up. As the billionaire often points out, keeping some cash on hand allows you to take advantage of corrections without having to sell other investments.