Regardless of whether they think ASX shares will head up or down in 2023, one thing experts agree on is that volatility will continue this year.
The steep interest rate rises of the past nine months are finally starting to have an impact on real world consumers and businesses. And that means an economic slowdown is imminent, with some countries even plunging into recession.
However, there is one way investors can beat volatility.
That's by buying quality ASX shares while adopting a long-term investment horizon.
The idea is that if the company can grow over a long period of time, the short-term ups and downs in the share price will not matter. The chances are that the stock will be worth more in five years than it is now.
Taking this mindset, Tribeca portfolio manager Jun Bei Liu this week named three S&P/ASX 200 Index (ASX: XJO) shares that she would buy now for the long run, despite short-term pressures bearing down on them:
Buy this company for the next 5 years' earnings
Even for the technology sector, the Xero Limited (ASX: XRO) share price has taken a beating.
Over the past 15 months, the stock has halved in value.
What's more, the company is now transitioning to a new chief executive and there has been some criticism that it is putting capital back towards expansion rather than fattening its bottom line.
"This company's gone through a pretty tough time," Liu told Switzer TV Investing.
"Xero has been sold off on the back of potential… recession worries for the UK."
However, in the long term, Liu feels like Xero shares show an "incredible amount of value".
"It may be volatile because it's an expensive company, but our view is that you do not buy this company for the next six months' earnings," she said.
"You really buy it for the next five years. This company's well on track to achieve the growth targets it's put in place over the long term."
Watch this stock take off later this year
Interest rate rises naturally mean a depressed real estate sector. So Liu reckons urging investors to buy REA Group Limited (ASX: REA) might be seen as "contrarian".
"This is a high quality company you need to put your money in," she said.
"Our view is that this is a business that delivers long-term growth."
REA Group's earnings are not driven just by the absolute volume of listings, according to Liu, but the "depth of penetration".
"It's getting more dollar for every listing it's generating on its website," she said.
"And it has created that phenomenal momentum across its business."
The real estate classifieds provider is also a market leader, and has a "flexible" cost base that it has historically shown to dial down in tougher economic times.
"In the near term, there maybe a bit of weakness across listings," said Liu.
"In six months' time they will be cycling some of those weak numbers and we should expect that to improve."
The REA share price has lost 16.8% over the past 12 months, but has picked up 12.2% so far this year.
Client contracts coming and maybe a takeover?
For a technology stock, NextDC Ltd (ASX: NXT) hasn't been a complete disaster in recent times — but it has still lost 23% since the start of last year.
Liu doesn't see the company as a typical tech firm.
"It's an infrastructure stock. It needs to keep spending to grow its footprint."
As well as the general tech malaise, the past year has seen investors disappointed with the lack of big-name client signings.
"Our view is that, the next 12 months, the company will start announcing some smaller contracts. We heard there's a lot more activity in that commercial space."
Its dominant place in the Australian market might even make it a takeover target.
"M&A [mergers and acquisitions] globally is picking up in that whole space," said Liu.
"We do see potential for a lot of suitors coming to Australia."
