The S&P/ASX 200 Index (ASX: XJO) fell by 2.1% yesterday. I think this is an exciting time to find opportunities on the ASX share market.
There are early indications that the ASX 200 could fall another 1% today, or at least start 1% down.
Why a falling ASX share market excites me
The stock market is meant to be volatile, so times like this shouldn’t be too unexpected. We just don’t know when they’re going to happen.
I still have many years of investing new money into shares, so being able to buy businesses at lower prices is a good thing in my opinion.
Before this recent plunge, I’m sure most people would have said they’d like cheaper prices or an opportunity to buy at better value.
But the ASX share market doesn’t decline for no reason. It’s at times of uncertainty that business valuations fall. The only way to take advantage of lower prices like this is to actually invest at the lower prices.
Trying to catch a falling knife?
Of course, there’s a worry that share prices could keep falling and falling. It’s certainly possible. You would need a crystal ball to know what’s going to happen next.
There are two things I’d say about the potential continuing fall of prices. First, if investors only choose investments that they’re confident to own for the long-term at a price they’re happy with, then an even lower price in the shorter-term wouldn’t be too painful.
Second, investors can take an approach of steadily investing it rather than doing it in one big lump sum. That’s called dollar cost averaging. It gives a higher chance of investing at a lower price. But it could also mean missing out if prices recover and rise.
Which opportunities are there on the ASX share market?
There are plenty of quality businesses that I’d like to buy at lower prices like Pushpay Holdings Ltd (ASX: PPH), Redbubble Ltd (ASX: RBL), Adore Beauty Group Ltd (ASX: ABY), City Chic Collective Ltd (ASX: CCX), Volpara Health Technologies Ltd (ASX: VHT), Wesfarmers Ltd (ASX: WES), Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), Future Generation Global Invstmnt Co Ltd (ASX: FGG) and Betashares Global Quality Leaders ETF (ASX: QLTY).
Investors could decide to buy more of shares they already own, or use this drop as a chance to buy new names they’ve been looking at.