How to exploit the ASX's current weakness for long-term gain

Market weakness doesn't need to be the enemy. It can be your best friend.

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I think it's fair to say that the Australian share market has had a disappointing year.

As things stand, the benchmark ASX 200 index is flat year to date before dividends. So, unless it has a heroic month in December, it's going to finish the year with a return well short of average.

However, seasoned investors recognise that periods of weakness like we are experiencing at present can be the key to long-term gain. Especially if you can identify high-quality ASX shares that are trading at a discount because of the market weakness.

Buying ASX shares at a discount

Right now when you look across the ASX boards, you will see some of the highest quality companies that the market has to offer trading far closer to their 52-week lows than their highs.

Companies like CSL Limited (ASX: CSL), ResMed Inc. (ASX: RMD), Treasury Wine Estates Ltd (ASX: TWE) immediately spring to mind.

Over the last decade, their shares have generated an average annual return of 15%, 16.4%, and 10.4%, respectively. This means that $10,000 investments in their shares would now be worth approximately $40,000, $46,000, and $27,000, respectively. That's a total of $113,000 from an original $30,000 investment.

And with their respective outlooks remaining very positive, according to analysts, and their shares trading at a discount to historical multiples, there's a real possibility that they could continue to beat the market over the next decade if bought today.

So, rather than focusing on what the market isn't doing this year, it may pay to think about what it could do over the next 10 years. And what investing in discounted ASX shares today could do for your portfolio during that time.

Overall, market volatility might be frustrating, but I think investors should view it as a buying opportunity.

Motley Fool contributor James Mickleboro has positions in CSL, ResMed, and Treasury Wine Estates. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended CSL and ResMed. The Motley Fool Australia has positions in and has recommended ResMed. The Motley Fool Australia has recommended CSL and Treasury Wine Estates. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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