S&P/ASX 200 Index (ASX: XJO) shares have seen much volatility in 2022. The index hit low points in both June and September as investors came to terms with the level of inflation and feared how high interest rates might go.
But, the ASX 200 has been recovering since those lows, which we can see with the return of the exchange-traded fund (ETF) iShares Core S&P/ASX 200 ETF (ASX: IOZ).
With the ASX 200 only down by 5% in the year to date, does it make sense to buy now?
ETF investing
If investors are just buying the ASX 200 as a whole, with an ETF like the iShares Core S&P/ASX 200 ETF, BetaShares Australia 200 ETF (ASX: A200), or even the Vanguard Australian Shares Index ETF (ASX: VAS) which tracks the S&P/ASX 300 Index (ASX: XKO), then I think investors could just use a regular investment plan.
An index doesn't usually change in price as much as individual shares, and it's very hard to say how an index is going to perform in the short term, or if it's good value (unless it's down heavily). Plus, with the ASX relatively highly weighted to ASX resource shares, it's even more unpredictable.
If I were investing in an ETF, I'd just put a regular amount – say $1,000 a month or $3,000 a quarter – into the ETF and not worry about 'timing' the market.
Buying individual ASX 200 shares
I think it's easier to evaluate an individual business than the whole market, so we can be a bit pickier if looking at specific names like BHP Group Ltd (ASX: BHP), Wesfarmers Ltd (ASX: WES), or Woodside Energy Group Ltd (ASX: WDS).
I'd be happier to buy resource shares when sentiment about the commodity is low.
For example, the iron ore price and BHP share price were substantially lower a few months ago, so the resource giant was more compelling compared to now.
I'm not going to run through my thoughts on 200 different businesses, but I will say that I generally think the market has been too pessimistic about retailers on a three-year view.
I have just written an article outlining my positive views on Brickworks Limited (ASX: BKW) and also pointed out that some ASX tech shares could be beaten-up opportunities because they are still growing at a solid pace. Accordingly, I named the ASX 200 tech share Xero Limited (ASX: XRO) as an idea.
Foolish takeaway
Volatility can be a great time to pick up some long-term growth businesses at cheaper prices, which can go a long way to help us outperform the market over time. But, there may well be some more dips in the coming months, particularly if inflation stays elevated for longer than expected.
