It looks as though ASX shares will endure a tough end to the trading week this Friday. At the time of writing, the S&P/ASX 200 Index (ASX: XJO) has slipped 0.24% lower and is back down to around 8,960 points.
But even so, ASX investors don't really have too much to complain about, one could argue, if we zoom out a little. By any measure, the past few years have been some of the ASX's best in recent memory. Even after today's drop, the ASX 200 remains up a very healthy 9.2% year to date and 11.35% over the past 12 months. It was only earlier this month that the index crossed 9,000 points for the first time ever.
As a result, it's been a great time to own ASX shares.
However, where we stand today leaves ASX investors with a conundrum: ASX shares are expensive right now. Very expensive.
Of course, there are exceptions. No one would call Woolworths Group Ltd (ASX: WOW) shares pricey at the moment, considering the big post-earnings drop we've seen this week. But on the whole, buying a quality company that isn't facing obvious headwinds right now won't come cheap.
Commonwealth Bank of Australia (ASX: CBA), for example, still remains one of the most expensive bank stocks in the world. Despite a minor sell-off in recent weeks, CBA still trades on a historically low dividend yield of 2.8% today. CBA's big four peers are cheaper. But even so, all three have hit new multi-year highs in recent weeks.
As have Coles Group Ltd (ASX: COL), Qantas Airways Ltd (ASX: QAN), Telstra Group Ltd (ASX: TLS), and Wesfarmers Ltd (ASX: WES).
All of these blue-chip shares are currently at levels not seen in years, or ever. All are trading with very low dividend yields, at least relatively speaking, and with price-to-earnings (P/E) ratios at historic highs.
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How to invest in ASX shares when the market is at record highs
This can make it difficult to find an obvious bargain if one is in the mood to invest.
Many investors might just be tempted to avoid the market as a result. But I think that might be a mistake.
It's always easy to make the case that markets are overvalued, and, as such, a market correction or crash is imminent. Many investors might be stockpiling cash right now, waiting for this inevitable fall back to earth.
Sure, this could happen. But it also might not happen. Investors with this mindset should keep in mind that markets, at least historically speaking, have always gone up far more often than they go down. That's why the ASX 200 hit 9,000 points for the first time ever this month.
If the markets continue to go up more than they go down, it makes sense to keep investing. Even if prices look relatively high.
Over the long term, shares have consistently outperformed every other asset class, as we discussed this month. And that's despite the infamous volatility of the share market.
The investors that usually profit the most from the market's long-term upward trajectory do so because they know this and invest as much as they can, as soon as they can. Adopting this attitude will serve any investor well today, in my view.
