I'm always on the lookout for ASX share opportunities that are priced too cheaply for their future prospects. When the entire ASX share market declines amid indiscriminate selling, investors can pick up bargains.
Sell-offs don't happen for no reason, there's usually a reason for the fear. Whether that's because of a pandemic, inflation, AI worries or something else.
Those fears can make investors pause before investing, yet that's when the best prices are often presented. Who knows how long prices will stay as low as they are? Or the prices could go even lower.
In the last few years, we've seen some recoveries happen very quickly, as we saw after the tariff self-off last year and the COVID-19 drop in 2020.
With many share prices still at their lowest point in months or in some cases years, I think this could be a great time to invest.
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Why this is a great time to invest in ASX shares
I think that Warren Buffett, who led Berkshire Hathaway to become the huge business it is today, has given some very useful pieces of advice over time on how to consider times like this:
If you expect to be a net saver during the next five years, should you hope for a higher or lower stock market during that period?
Many investors get this one wrong. Even though they are going to be net buyers of stocks for many years to come, they are elated when stock prices rise and depressed when they fall.
Only those who will be sellers of equities in the near future should be happy at seeing stocks rise. Prospective purchasers should much prefer sinking prices.
There are some ASX tech shares that are now down more than 50% from their peak within the last year or so.
When a business falls 50%, if it were to recover back to that previous level then that would be a rise of 100%. Of course, we shouldn't necessarily anchor our share price expectations to where it has been at previous levels. It could take a long time to recover.
But, at this lower price, the business doesn't have the same level of expectations built into the valuation, so it's a much better time to invest. Companies like Pro Medicus Ltd (ASX: PME), Xero Ltd (ASX: XRO) and WiseTech Global Ltd (ASX: WTC) have fallen heavily. These three companies could be primary candidates to bounce back the most if they regain the confidence of the market.
I think this period is the right time to scan the ASX share market for opportunities. I'm planning to put money to work this week.
