Concerns over the coronavirus have whipped investors in ASX shares into a panic this week. The S&P/ASX 200 Index (INDEXASX: XJO) recorded its seventh straight day of losses on Monday. With some key data expected to be released today, it could be another wild ride for the Aussie markets.
One thing that most investors will be thinking about is when to "buy the dip". ASX shares will inevitably rebound at some point, but how do you know where the bottom of this market correction is?
Why you shouldn't try and time the market with ASX shares
Market timing is the process of waiting to buy ASX shares right at the bottom of the correction. In theory, that would mean you could buy low and sell high, picking up assets for the best possible price.
However, it's much easier said than done. For instance, you can look at any number of market commentators earlier this year talking about another 2 years of growth. I'm sure there are a number now saying that we're looking at a GFC-style crash.
One simple strategy is to avoid market timing altogether. There is a classic phrase in investing that goes, "time in the market is better than timing the market". I like to think that is a solid strategy given past trends.
If I choose to buy and hold strong ASX dividend shares like Telstra Corporation Ltd (ASX: TLS) or Macquarie Group Ltd (ASX: MQG), then I'm usually looking at investing for the long-term. While a short-term dip might be nice to buy more, I'm looking at long-term value.
Given that's the case, I don't think market timing is worth it. For instance, if I sat on the sidelines because the market is falling, I could equally miss out on the upside gains when it does rebound.
Foolish takeaway
Market timing is incredibly difficult to do, even by the best in the business. I'm just a casual investor looking to build my dividend portfolio, so I don't think it's a good match-up.
ASX share valuations have plummeted in the last week, which could mean opportunities to buy ASX shares on sale.
