Why now is a great time to buy ASX shares

Year-to-date, the S&P/ASX 200 is down more than 7%, but now could be a great time to dip your toe into the water

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) is on track for its eighth consecutive day of losses, down 0.4% as we head into the close.

As I wrote yesterday, so far in 2016, we've seen at least $114 billion in value wiped off the share market with the major losers resources companies and the big four banks.

Overnight, analysts from investment bank RBS wrote a note to clients telling them to sell everything bar high-quality bonds, while other investment banking analysts are highly pessimistic about global share markets, in particular, those that are exposed to slowing growth in China and dominated by resources and energy companies.

That's pointing the finger directly at our own ASX – with its heavyweight miners and oil companies.

But now could also be the best time to buy shares, as it's not often investors get a chance to pick up shares in high-quality companies at cheaper prices. Here's a small selection of high-quality companies listed on the ASX – and their share price changes since the start of this year.

Company Year-to-date price change
CSL Limited (ASX: CSL) Down 2%
Cochlear Limited (ASX: COH) Down 4.7%
ResMed Inc. (CHESS) (ASX: RMD) Up 0.1%
REA Group Limited (ASX: REA) Down 7%
Ramsay Health Care Limited (ASX: RHC) Down 6%
Domino's Pizza Enterprises Ltd. (ASX: DMP) Down 2.7%
SEEK Limited (ASX: SEK) Down 9%
Carsales.Com Ltd (ASX: CAR) Down 2%
Reece Ltd (ASX: REH) Down 6%
Challenger Ltd (ASX: CGF) Down 5%
Technology One Limited (ASX: TNE) Down 6.5%

Source: CapitalIQ

By comparison, the S&P/ASX 200 is down more than 7%.

If you ignored all the market noise and saw that REA Group's share price was down 7% and Seek's 9%, would that make you more interested in buying shares? It should because it means shares are cheaper than they were last year, despite no news that would indicate that these companies are feeling or seeing any pain.

They are all the same businesses from just over a week ago. Many of the companies above will likely report higher revenues, profits, earnings and dividends in the 2016 financial year than they did last financial year. The only difference is that investors now have the chance to buy them at a cheaper price.

Sure, the share prices may fall and get even cheaper – giving you an even better price to get in.

Foolish takeaway

If you are a long-term investor, it's time to embrace the volatility, keep an eye on the quality companies on your watchlist, and maybe dip your toe into the market.

Motley Fool writer/analyst Mike King owns shares in Casrsales.com, Seek, Resmed, Cochlear and CSL. You can follow Mike on Twitter @TMFKinga Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »