Next week could prove to be pretty volatile. I plan to invest in ASX shares next week if share prices do go lower.
Why I’m planning to invest
I invest some money into shares every single month. That’s not going to change in November.
But this November is different to a normal November with the US election contest between Donald Trump and Joe Biden. There’s also a rising wave of COVID-19 cases in the northern hemisphere.
Will Trump manage to pull off an even bigger surprise? Will the Democrats manage to pull off a clean sweep and get all the senators they need?
If you listen to each side, they accuse the other of being about to turn the country upside down.
Elections usually do make a bit of volatility. Just look at what happened in the run up to the Australian election last year. Can you believe that was just last year? A global pandemic and severe bushfires have distorted my sense of time.
I think ASX shares would be a great place to invest if the market does fall. The actual profit of Australian businesses isn’t going to be as affected that much by what happens in an American election.
If you have a chance to invest in a business at a lower price, I think it makes sense to invest. As buyers of shares, the main thing that determines our returns is the price we pay for the investment to begin with. Lower prices are obviously better. We just don’t know when those lower prices are going to happen.
Timing the market by waiting years for a crash doesn’t make a lot of sense, particularly when you’re missing out on a lot of dividend payments. But I personally believe that next week there could be some volatility if the election result is contested. There could also be volatility in a scenario where Biden wins but the Democrats don’t secure a full sweep.
What ASX shares I’m thinking about
I’d prefer to buy quality ASX shares. Sometimes a company’s share price can fall a lot further than the underlying value of its business. That’s what I saw during the COVID-19 crash in March.
There are also a number of portfolio-based businesses that I think could be good investments if their portfolios fall in value, or a discount to the net asset value (NAV) opens up or widens. I’ve got my eyes on ideas like Magellan Global Trust (ASX: MGG), Magellan High Conviction Trust (ASX: MHH), iShares S&P 500 (ASX: IVV) and Betashares Nasdaq 100 ETF (ASX: NDQ).
I’m bullish about the long-term
I believe that if there’s any decline in the market next week that it will just be temporary.
Over the long-term the ASX share market has continued to climb higher, particularly when you add in dividends. A COVID-19 vaccine is looking increasingly likely next year with so many candidates being worked on at the same time.
I’m no vaccine expert, but the Oxford University – Astrazeneca vaccine seems to be making good progress. That’s why CSL Limited (ASX: CSL) has been tasked with manufacturing the vaccine if it proves to be safe and effective.
The prospect of lower share prices excites me rather than scares me. March 2020 was a unique opportunity to buy shares – November could be another month to buy shares at a cheaper price. Even if prices don’t fall, I still plan to invest in great ASX shares.
Where to invest $1,000 right now
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*Returns as of February 15th 2021
Tristan Harrison owns shares of Altium and Magellan Global Trust. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of PUSHPAY FPO NZX and BETANASDAQ ETF UNITS. and has recommended Pro Medicus Ltd. The Motley Fool Australia owns shares of and has recommended A2 Milk, Altium and Pro Medicus. The Motley Fool Australia has recommended PUSHPAY FPO NZX and BETANASDAQ ETF UNITS.. 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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