There has been a lot of volatility on the ASX share market. But how low are valuations going to go with S&P/ASX 200 Index (ASX: XJO) shares? Have some businesses already seen a bottom in terms of their declines?
Some investors may be thinking that share prices and asset prices may fall further because interest rates are still going up.
Would it be better to wait for a lower price, or should investors jump on what's available today?
Billionaire investor and co-founder of private equity business The Carlyle Group, David Rubenstein, thinks investors should jump in now.
Time to be greedy?
Talking at CNBC's Delivering Alpha Investor Summit in New York, Rubenstein said:
People shouldn't be afraid of going in and buying things now. The great fortunes in the investment world are often made by buying things at discounts.
Aside from the COVID-19 crash in 2020, the US share market has been on a bull run since the Global Financial Crisis, so there haven't been many times when investors can buy shares at a discount.
Rubenstein said that a number of names are now trading at a relative discount, according to CNBC reporting.
He thinks it would be better to start investing now than trying to guess when the market bottom will be. Rubenstein believes the share market is "much closer to the bottom" than the top. He doesn't think shares will fall another 50% or even 25% from here. The US share market could also influence ASX shares. He also said:
It's a fool's errand to find the bottom in the market or the top in the market. Trying to wait to the absolute bottom is probably a mistake, in my view.
What's going to happen next with ASX shares?
Let me just consult my crystal ball here…
It seems likely that central banks are going to keep increasing interest rates because inflation hasn't been brought under control yet.
However, assets aren't necessarily going to drop in valuation in sync as higher interest rates rise.
The tricky thing for investors is that interest rates can have a big effect on share prices, bond values, and savings account interest rates. We just don't know how high interest rates will need to go.
After that, we don't know what the 'normal' interest rate will be for Australia or the US. There is a big difference, in my opinion, in an interest rate between 2% and 3%.
For me, I continue to invest each month into ASX shares that I think are good value at the time. This could be described as dollar-cost averaging.
I'm enjoying the lower prices that we're seeing and will take advantage of them as long as possible. I believe that buying at this level will help my long-term wealth-building.
