It could be tricky for a beginner investor to know when to start investing in ASX shares.
Negative headlines sell. They attract a lot of attention and website clicks. When share markets are falling, there are regular fear-evoking headlines that talk about how many billions of dollars the share market has dropped on any given day.
But what if the worst days for falls are actually among the best days for buying ASX shares?
Let's look at the share price graph for REA Group Limited (ASX: REA) or Xero Limited (ASX: XRO) and ask which time periods appeared the best time to buy. It would seem to me, on a graph, that market crashes provide the cheapest buying opportunities.
So, that's why I believe this period — amid elevated inflation and rising central bank interest rates — could prove to be an opportune time to buy ASX shares.
But let's look at some very wise advice from legendary investor Warren Buffett who once compared shares to buying hamburgers.
Hamburger discount
Buffett said:
To refer to a personal taste of mine, I'm going to buy hamburgers the rest of my life. When hamburgers go down in price, we sing the 'Hallelujah Chorus' in the Buffett household. When hamburgers go up in price, we weep. For most people, it's the same with everything in life they will be buying — except stocks. When stocks go down and you can get more for your money, people don't like them anymore.
To apply that quote to today's situation, many ASX shares are now close to the cheapest they've been in over two years, but many investors seemingly don't want to buy them anymore.
How does this apply to beginner investors for ASX shares?
Investing is about choosing investments that have compelling long-term futures, yes.
But, an important part of investing is 'buying low'. How can someone make a gain on their investment if they significantly overpaid or bought at the price peak in the first place?
Paying a good price is key for good long-term returns.
While it's impossible to say when share prices will go lower (or higher), we can evaluate the potential investments that are in front of us. Is this business that we're looking at valued attractively for long-term investment?
At the moment, I'm seeing lots of opportunities, which I have written about recently, including Brickworks Limited (ASX: BKW), Reece Ltd (ASX: REH), Beacon Lighting Group Ltd (ASX: BLX), Baby Bunting Group Ltd (ASX: BBN), City Chic Collective Ltd (ASX: CCX), and Adairs Ltd (ASX: ADH).
This certainly seems like a good time to be buying hamburgers for the long term.
