When should you buy ASX shares in a falling market?

When should you buy ASX shares in a falling market?

I ask myself that question every time the ASX does fall. The ASX hasn’t been this low in a couple of years.

If only you could have known that, not bought any shares and bought them all today! But alas, the crystal ball didn’t tell me that.

People rightfully worry that trying to catch a falling knife can be dangerous with an individual share. Look at how far Vocus Group Ltd (ASX: VOC) and TPG Telecom Ltd (ASX: TPM) fell before they found the bottom for their share prices.

However, I think it’s different when you’re talking about the whole share market. The telco sector was correctly re-rated, but the Australian share market has fallen 13% since the end of reporting season in August. Share prices falling just because other shares are isn’t the same thing as a company-specific or industry-specific problem.

It’s pretty unlikely that this is the start of the next GFC. It’s quite normal for share markets to fall 10% or more in a relatively short period of time. Over the long-term shares go up, but they don’t go up in a straight line. They are meant to be volatile.

As long as you’re looking to invest in shares you should celebrate that we’re seeing lower prices. If food is discounted at the supermarket it’s a good thing, you should think the same with shares.

However, instead of thinking about the entire share market I think it’s better to focus on a few quality names, unless index investing is your preferred choice with an ETF like Vanguard MSCI Index International Shares ETF (ASX: VGS).

Falling share markets can provide the decline you need to buy your favourite shares, but what the rest of the market is doing doesn’t ultimately make me want to buy particular shares more or less.

I’m looking to put some money to work at the moment. I haven’t decided what I’m going to invest in yet, but my choice will be a business I write about regularly trading at good value and with long-term growth potential. Costa Group Holdings Ltd (ASX: CGC) and Citadel Group Ltd (ASX: CGL) are two high on my watchlist, but are not ones I’m considering this week.

One share that I am thinking about is this growth share which is just expanding to Asia.

This leading ASX growth share is considered one of the most defensive on the ASX

You might not know this market leader's name, but it's rapidly expanding into a highly profitable niche market here in Australia. Even better, the shares boast a strong, fully franked dividend that should balloon in the years to come. In other words, we're looking at the holy grail of incredible long-term growth potential AND income you can watch accruing in your account in real time!

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Motley Fool contributor Tristan Harrison owns shares of COSTA GRP FPO. The Motley Fool Australia owns shares of and has recommended COSTA GRP FPO. The Motley Fool Australia owns shares of Citadel Group Ltd. The Motley Fool Australia has recommended TPG Telecom Limited, Vanguard MSCI Index International Shares ETF, and Vocus Communications Limited. 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 Scott Phillips.

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