The S&P/ASX 200 Index (ASX: XJO) isn’t starting the week too well. ASX 200 shares are down another 0.62% today (at the time of writing), which backs up yesterday’s 0.7% drop. The ASX 200 is now sitting at 5,784 points, which is a 3-month low. The index has been down trending for a month, and is now 6% below where it was on 25 August. It’s an interesting week for all assets as well. Gold has slumped, oil too. Even cryptocurrencies have been selling off of late.
So, is this the right time to be buying ASX 200 shares? The old saying does go ‘buy low, sell high’ after all…
Time to load up the truck on ASX 200 shares?
With the market at a 3-month low, I think it is a good time to think about deploying some capital in the markets, especially if you’ve spent the past few months sitting on your hands. No one knows whether this dip in ASX 200 shares is a temporary one or not. The markets could explode higher tomorrow, rendering today’s falls as the ‘bottom’. Equally likely, markets could continue to plunge tomorrow, or else just stay where they are. It’s therefore foolish (and not the good kind of Foolish) to try and base your investing decisions on these factors alone.
But general market weakness does mean there’s a fair chance any companies you might have been watching will be trading at relatively low valuations, at least compared to what we’ve seen in recent months. So I’m using this slump in ASX 200 shares to renew my watchlist, and reevaluate any shares I’ve put in the ‘too expensive’ bucket in recent months.
I’m only able to do this becuase I haven’t been buying any shares, at least since April. I thought it prudent to instead build my cash position back up after exhausting most of it in the March crash. I’m now considering putting some of that cash to work (it’s not doing me any good in the bank anyway) and initiating or topping up ASX 200 share positions that look cheap today. Mind you, I’m only planning on deploying some cash. I’m still keeping most of my powder dry in case things continue to trend lower.
And if things rebound and the markets start pushing back towards 6,000 points, then I’ll start stockpiling cash once again. Timing the markets is usually always a terrible idea. But that doesn’t mean you can’t tilt the playing field a little bit to give yourself some options.