Prior to this week's selloff, the S&P/ASX 200 Index (ASX: XJO) was trading close to its record high.

This might seem like a terrible time to invest, but it's not as black and white as that.

Investing at record highs

Sure, when the market is at a record high, there's a fair chance that some ASX shares will have risen far beyond what could be deemed fair value. This could make them laggards in the months that follow as investors see more value in other areas.

I would avoid them and look at what Warren Buffett has done over multiple decades as he compounded his Berkshire Hathaway (NYSE: BRK.B) investment portfolio into one of the largest in the world.

Finding fair valued ideas

There is sometimes a misconception that Buffett only looks for cheap shares to buy. But while he certainly isn't one to look a gift horse in the mouth, his focus is more on quality than price. He famously quipped:

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

You might make a quick buck by buying a cheap average ASX share, but it is highly unlikely that these types of shares will compound over the long term.

Whereas if you can buy high-quality companies with sustainable long-term competitive advantages, you are likely to have a portfolio filled with compounding machines. This is the way to grow your wealth.

Compounding is often considered the unofficial eighth wonder of the world, and it isn't hard to see why.

It helps explain why an investor putting $500 into the share market each month would see their portfolio grow to be worth $100,000 in 10 years if they achieved a 10% average annual return.

But how do you invest at record highs?

The key is simply to buy those aforementioned high-quality ASX shares when they are trading at fair prices.

Take Pro Medicus (ASX: PME), for example. It is arguably one of the highest-quality companies on the Australian share market.

Its shares have never looked 'cheap', but they have traded at fair levels relative to its growth potential.

Despite never appearing cheap, Pro Medicus' shares have delivered a stunning 60.8% per annum average return over the past five years. This would have turned a $5,000 investment into almost $55,000 today.

Take advantage of impatience

The market's impatience often presents opportunities for investors. CSL Ltd (ASX: CSL) is an example of this.

It is another ASX share that could be regarded as Australia's highest-quality company.

Due to margin pressures in the near term weighing on its growth, the market has fallen out of love with the biotechnology giant. This has led to its shares underperforming the market.

But with analysts now expecting double-digit earnings growth from CSL for the foreseeable future, this ASX share could soon make up for lost ground.

If Buffett were Australian, I think he would have been taking advantage of its underperformance to build up a position in CSL before the tide turned.

Incidentally, Bell Potter certainly thinks investors should be doing this. They recently put a buy rating and $345.00 price target on its shares, which implies a potential upside of approximately 25% for investors.

Final word

Overall, I wouldn't be put off investing when the market is at a record high. Investors just need to look for high-quality ASX shares that are trading at fair valuations.