The S&P/ASX 200 Index (ASX: XJO) is nearing February's record high of 8,615.7 points. At times like this, it can seem difficult to find value.
Just like many other investors, I'm not complaining seeing my portfolio have consecutive days in the green this week.
However I also am hesitant to buy when the market seems to be ignoring very real global economic uncertainties.
Right now the gains seem too good to be true.
One prime example of this is Commonwealth Bank of Australia (ASX: CBA) shares. The price has continued to hit record high after record high despite experts identifying it as overvalued.
So with the ASX 200 close to the highest it's ever been, let's look at some other investment strategies to consider if the market is overvalued.
Dividend investing
If you are struggling to find stocks that you expect to increase in value over the short-term, dividend investing might be worth considering.
Dividend investing is a viable strategy when the market is at an all-time high. It focuses on income and long-term value over short-term price appreciation.
Essentially, dividends can provide passive income to shareholders, even if the share price remains flat or falls.
Dividend stocks – especially those with a history of consistent payments – tend to be established companies with strong cash flows.
The Motley Fool's Sebastian Bowen shared late last month 10 of the top ASX dividend shares.
Included in the 10 are companies like:
- ANZ Group Holdings Ltd (ASX: ANZ) with a yield of 5.71%.
- Woodside Energy Group Ltd (ASX: WDS) with a yield of 8.66%
- BHP Group Ltd (ASX: BHP) with a yield of 4.96%.
Target international markets
While the ASX might be nearing a record high, it could be an opportunity to find value in other markets.
This can be done through ASX ETFs that offer exposure to emerging markets.
Markets outside of the Australian and US include:
- Vanguard FTSE Emerging Markets Shares ETF (ASX: VGE) – offers exposure to more than 5,900 holdings from emerging economies such as China, India, Taiwan, Brazil, Saudi Arabia and South Africa.
- Betashares Capital Ltd – Asia Technology Tigers Etf (ASX: ASIA) – aims to track the performance of the 50 largest technology and retail companies in Asia (excluding Japan).
Target individual sectors
The ASX 200 index is made up of the 200 largest companies by market capitalisation.
But it's important to remember it is heavily weighted towards financial stocks like the big four banks, and mining/resources giants.
That still leaves plenty of opportunity in other sectors.
For example, cybersecurity is a sector largely expected to experience strong growth in demand as companies and governments invest in digital defence.
Investors may get access to leading companies in this sector through the Betashares Global Cybersecurity ETF (ASX: HACK).
Or, you may see opportunity in the future clean energy transition, which could be accessed by an ETF like Betashares Global Uranium ETF (ASX: URNM). It includes global uranium miners and producers positioned to benefit from decarbonisation and energy security.
Foolish takeaway
Whilst the ASX 200 currently might make it seem like there's no value to be had, there are always opportunities.
On the flip side, there is such a thing as over diversification, and investors should always make informed decisions.
As the great Kenny Rogers would say, you've got to know when to hold them, know when to fold them.
