A value investor's motto is that you should buy shares like you buy groceries (i.e. BTFD...more acronyms sorry) and therefore theoretically these crashes in the share price can represent buying opportunities.
Assuming that you still see the intrinsic value stacking up, and assuming that you are right and the market is wrong, that is.
Like you and me, all businesses have a life cycle. They are born, they grow, and one day, they wither and die (or merge, or get bought out, or taken over).
For that reason a value investor must know when to sell as well as when to buy.
Fortunately Montgomery is a market pro, and being in the market full time he has the ability to manage risk, so in turn he was able to see the writing on the wall for the mining service sector and sold out in 2012 before the SHTF.
The way in which this is possible is to forecast the economy and its unpredictable cycles, and to recalculate the intrinsic value of a security on an ongoing basis.
In my experience, too many amateur investors fall in love with their analysis, and while they enjoy the process of buying stocks they find that breaking up is harder to do (too often they think the market is wrong, when perhaps it is the outlook for the company or sector that has changed).
Here's what happened to Decmil (DCG), which struggled to stay profitable after the resources investment boom peaked in 2012:
Forge Group (FGE) went to the wall almost overnight in 2013 after massive power station losses were unexpectedly revealed to the market, with Forge's Managing Director David Craig (not the singer) noting that the this was "extremely disappointing".
David Craig (not the singer) proved to a master of understatement as he noted that unexpected writedowns on two power stations for the 2013/14 financial year totalling $127 million were "not acceptable to the board". Probably not that acceptable to shareholders either, tbh.
Herein can lie some of the many challenges with value investing in individual stocks - companies can report half-truths, or mask enormous losses, or trade while insolvent, or sometimes even worse.
In fact, in my opinion the index is probably heading lower when the prices of coal and iron ore crash again, and, as always, it's only a matter of time before the next 30 to 50 per cent drawdown. So you'd better be prepared.