I've been busy investing in the ASX share market over the past week. When share prices go lower, I get excited because it means I can buy the same investments at a cheaper price.
While investing $6,000 may not seem like that much to wealthier readers, it's a sizeable outlay for my portfolio at this stage in my investing career. The last time I invested $6,000 in a week was during March 2020.
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What did I invest in?
Motley Fool's trading rules don't allow me to talk about the exact names that I invested in, but I'll say that I invested in a variety of ASX shares, including an exchange-traded fund (ETF) focused on quality global shares, a real estate investment trust (REIT) and a listed investment company (LIC) focused on ASX small-cap shares.
I decided to go for the REIT because of the ongoing rental growth, high occupancy rate, attractive distributions and appealing share price decline over the past year or so. My thought on the current economic conditions is that if inflation remains high, then the REIT's rental growth could be stronger, and if inflation falls then interest rates could reduce and that would help the debt costs and property valuations.
I was attracted to the other opportunities because of the quality of the businesses, the long-term growth potential and the fact they're noticeably cheaper.
The names I invested in aren't that important but I want to highlight that the current prices of many of the different stocks seem the most attractive they've been over the last several months.
Why invest in ASX shares now?
It's not often that share prices, or the market in general, drops by say 5% or 10%. The S&P/ASX 200 Index (ASX: XJO) is down 7.5% since 1 August 2023.
One of the best, and most simple, pieces of investment advice is about being fearful when the market is greedy and greedy when the market is fearful. I like to be greedy when there is broad market selling.
I don't know how much lower the ASX share market is going to go, if only my crystal ball was working! I think the years of 2020 and 2022 showed how bearish the market can become, and how prices don't typically stay low forever.
To capitalise on the lower asset prices, we actually need to make the investments during the rocky times, even if it seems a bit scary to do so.
The US Federal Reserve has been pretty consistent over the last year talking about getting the job done and being restrictive for some time to ensure that mistakes made a few decades ago were not repeated again. It's surprising to me that the market is only just understanding that stance and taking it as seriously as it should have.
I believe that interest rates are unlikely to be cut in the US or Australia in the next nine months. The lower share prices of this week seem more reflective of that possible scenario.
To be clear, I'm very optimistic about the long-term for good businesses and the ability for good returns to be generated, which is why I've been investing. The main thing to me is that a number of good ASX share investments are now better valued, which is why I decided to jump on them.
