Ignore the noise and focus on these ASX shares instead

If ever there was a time for investors to ignore the noise, it's now. Keep your eyes on the horizon, and these quality ASX infrastructure shares.

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If ever there was a time for ASX investors to ignore the noise, now is that time.

While day traders may delight in the opportunities for quick gains in these volatile conditions – and lament the equally quick losses – it can be a trying time for buy to hold investors.

By that I mean investors who buy shares in quality businesses with good management and growing revenues, and hold onto those shares for many years. Generally, until their original investment thesis changes substantially enough to alter the long-term outlook for share price gains and/or dividend streams. Only then (barring any urgent needs for funds) is there good reason to sell.

Buy to hold investing, with the right diversification among shares, is a historically proven way to grow your wealth over time. But it can be vexing when the share prices of your carefully chosen businesses fall on rumours of a 'hard Brexit', then rise on news of a promising COVID-19 vaccine, only to fall again when the United States' president is stricken by that same virus.

But fear not. (Noise alert!)

The latest headlines across the financial media inform us that Australian and Asian share markets are swinging higher again today and US markets should follow.


Because Donald Trump may be released from hospital as soon as today (tonight Aussie time).

As I said, if you're day trading you could lock in some quick gains if you guess the market direction on these kinds of short-term announcements correctly. Or book some quick losses if you guess wrong.

But if you're holding onto quality shares that look set to perform well during the COVID-19 recovery period and beyond, then your best bet is to tune out the noise. Or at least take it all in with a big grain of salt.

Focus on what matters

Not to diminish Trump's physical battle to recover from the coronavirus. I wish him, and everyone infected with COVID-19, a full and rapid recovery. But at the end of the year, or next year, this will have no bearing on the share prices of your ASX holdings. Even if this event serves to tip the November election for a Joe Biden victory.

You may have heard that Biden has pledged to raise the US business tax rate. The same rates Trump slashed to the delight of corporate America, helping send US share markets to new highs. But there's no guarantee Biden will use up the political capital needed to try and follow through with this pledge. And even less certainty that his Democratic party will take control of the US Senate to enable raising the corporate tax rates in either case.

There's enough uncertainty already that buy to hold investors should readily ignore this as noise. Topping it off, increasing corporate tax rates in the US would likely drag on US share markets, but the longer-term impact on ASX shares would be mixed… and minimal.

Yes, some Aussie companies would have to pay more taxes in the US, should this all come to pass. But at the same time, many ASX shares would get a boost as global investors re-rate their potential returns in an environment of higher US taxes.

Here comes the stimulus

What we do know for certain is that, following the COVID-19-led market panic in February and March, record levels of central bank and government stimulus measures were rolled out across the developed world.

And we know that share markets rallied at historic paces.

The S&P/ASX 200 Index (ASX: XJO) rocketed 35% higher from 23 March through to 9 June. And the tech-heavy Nasdaq Composite (INDEXNASDAQ: .IXIC) posted an incredible 76% gain from the 23 March lows through to 2 September.

Today, both indexes are still trading below those highs as investors await details of the next stimulus measures.

In the US, Democrats are still pressing their US$2.1trillion (AU$2.9 trillion) package. While Republicans continue to balk at that, Trump spoke out from hospital to urge both sides to reach an agreement and pass a new spending package. As a long-term investor, it doesn't much matter if that passes this week or next month. What matters is the US government will most assuredly open the fiscal taps wide once more.

Here in Australia, we'll get the full details of the new budget tomorrow. From everything we've seen so far, it's going to be huge, with personal and business tax cuts, home buying incentives, and a big splash on manufacturing and state infrastructure programs.

That's a good reason to hold onto your infrastructure plays. And perhaps buy or add more of these two shares.

Two ASX shares to buy today

First up is Transurban Group (ASX: TCL). With a market cap of $38.6 billion, Transurban is not only one of the world's largest toll road operators, it also designs and builds new road projects.

When lockdown measures began to sink in earlier this year, Transurban's share price took a big hit, falling 39% from 19February through to 19 March. It's gained 42% since that low, leaving the share price down 4% in 2020. But as Victorians emerge from their travel restrictions and begin paying tolls once more, and with new road construction highly likely to ramp up with the coming wave of stimulus, Transurban is well positioned to offer significant mid to long-term share price growth. 

Second up is small-cap share Acrow Formwork and Construction Srvc Ltd (ASX: ACF). With a market cap of $78 million, Acrow manages more than 50,000 tonnes of formwork and scaffolding equipment across Australia.

Acrow's share price was smashed during the COVID-19 panic selling, falling 63% from 21 February through to 23 March. Since then the share price has soared 177% higher, putting it up 6% year-to-date.

But even after that phenomenal run, Acrow shares could have a lot further to run as the next big rounds of pandemic recovery stimulus spur new construction projects.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Transurban Group. 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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