It’s hard to know what to do when the ASX share market is trading expensively.
The last 12 months have been an extraordinary period of time. The world has been hit by a global pandemic that seemed as though it could trigger one of the worst recessions of all time. For some countries, industries and people it is worse than the GFC.
But then the central banks around the world, and some governments, decided to do everything they could to help their economies. That decision has helped things a lot, particularly here in Australia.
The S&P/ASX 200 (ASX: XJO) is almost back to its pre-COVID high. Plenty of large ASX shares like Commonwealth Bank of Australia (ASX: CBA) are close to where they were before. There are others like BHP Group Ltd (ASX: BHP) which are at their all-time highs.
What about shares outside the top 10?
With interest rates now at an incredibly low 0.25%, it pushes up investor interest in any business that’s generating growth. Tech shares in-particular are getting tons of attention. Afterpay Ltd (ASX: APT), Xero Limited (ASX: XRO), Zip Co Ltd (ASX: Z1P), Kogan.com Ltd (ASX: KGN), Temple & Webster Group Ltd (ASX: TPW) and so on – all on very high valuations.
It’s only businesses in the travel industry like Webjet Limited (ASX: WEB) which are still struggling.
What to do?
I still personally think there are pockets of value out there, I regularly write about them when I write about ideas. Names like Pushpay Holdings Ltd (ASX: PPH), Magellan Financial Group Ltd (ASX: MFG), Redbubble Ltd (ASX: RBL), Brickworks Limited (ASX: BKW) and MFF Capital Investments Ltd (ASX: MFF) are some of the limited number of names I think are good value, long term ideas.
But remember, you don’t need to buy if you don’t think something (or anything) looks good value. You can just wait for a better time to buy. As we’ve seen over the last year, prices can quickly change to become cheaper.
For me, as long as there’s an ASX share that I think is good value, I’m happy to invest in it – it doesn’t matter what the rest of the market is doing.
I suggest getting a free Rask account and accessing our full stock reports which may reveal some more ideas. Click this link to join for free and access our analyst reports.
