Warren Buffett is often regarded as one of the greatest investors of all time and for very good reason.

The Oracle of Omaha has built his Berkshire Hathaway (NYSE: BRK.B) into a US$1 trillion behemoth thanks to a simple yet effective principle: buying undervalued shares. By capitalising on market cycles and seeking value where others overlook it, Buffett has consistently outperformed the broader market.

Today, despite recent stock market rallies, there may still be opportunities to apply his timeless strategy and invest in undervalued ASX shares for long term wealth generation.

Warren Buffett's focus on undervalued shares

Buffett's goal isn't to find stocks trading at the lowest prices but to identify high-quality businesses selling for less than their intrinsic value. This could still mean paying more for a company compared to its peers if it boasts durable competitive advantages, such as a wide economic moat or exceptional management.

One famous Buffett quote encapsulates this investment strategy. He said:

It's far better to buy a wonderful company at a fair price, than a fair company at a wonderful price.

This disciplined approach has yielded impressive results for Buffett over decades. By focusing on intrinsic value rather than short-term market sentiment, he has been able to generate superior returns while weathering market volatility.

Following a similar strategy with ASX shares could help readers also outperform the market over the long term.

Taking advantage of market downturns

While predicting the timing of a stock market crash is nearly impossible, investing in undervalued shares can provide a cushion during turbulent periods. Companies trading below their intrinsic value are less likely to experience sharp price declines compared to those trading at inflated valuations.

In addition, short term market weakness can give you the opportunity to generate long term wealth if you can pick up high-quality ASX shares that have been sold off indiscriminately.

So, rather than getting fearful when there's a market selloff, investors might want to use it as a time to be greedy. Just like Buffett said:

Be fearful when others are greedy and greedy when others are fearful.

Opportunities in today's market

Despite the recent rally in global stock markets, there will always be pockets of opportunity out there.

For example, ASX shares CSL Ltd (ASX: CSL), Domino's Pizza Enterprises Ltd (ASX: DMP) and Treasury Wine Estates Ltd (ASX: TWE) are quality businesses that are trading at sizeable discounts to what some analysts say they are worth. You can read about them here, here, and here.

Overall, by following Buffett's principles of investing in high-quality businesses at discounted prices, investors can position themselves for long term wealth creation even if the market is at record highs.