ASX shares have been teetering between bull and bear markets for some time. The S&P/ASX 200 Index (ASX: XJO) fell 32.05% from 2 January to the market bottom on 23 March.
But no one knows exactly where the share market is headed in 2020. The benchmark index has now climbed 17.06% from that 23 March low to 5,321.40 points (at the time of writing).
So, are you an ASX share market bull or bear in 2020?
The case for being an ASX share market bull
Clearly, the coronavirus pandemic has had a huge impact on share markets around the world. The ASX has been no exception with many shares plummeting lower from mid-February onwards.
However, there are some positive signs here in Australia. There are talks of loosening some restrictions and starting to open up the economy. That's good news for individuals and businesses, while shareholders could benefit from stronger corporate earnings.
I still think the bulls are looking at either blue-chip ASX shares or those positioned for the future. That could mean a data storage company like NextDC Ltd (ASX: NXT) to capitalise on future working arrangements or a high-quality buy like CSL Limited (ASX: CSL).
If the coronavirus pandemic doesn't hit Australia as hard as expected, that could spark a recovery in ASX shares. There is significant fiscal and monetary stimulus driving the economy right now which could soften the blow. However…
It's easy to be a bear right now
Despite all that positivity, there are still some big question marks around ASX shares right now. There's the chance of a second wave of coronavirus like we've seen in Singapore, which could shut down the economy once again.
The other looming issue is the unknown. No one knows just what the economic impact of COVID-19 will be, or what the appropriate response is.
Even if Australia can reopen successfully, globalisation means our fortunes are heavily linked to those of the United States and China. Who knows which industries will emerge and which will fall or be changed forever as a result.
That could mean that ASX retail shares like Harvey Norman Holdings Limited (ASX: HVN) could be difficult to value right now. No one knows what the future looks like, which makes investing in cheap ASX 200 shares a difficult proposition.
If you're particularly bearish on the Aussie economy, it might pay to look at buying defensive shares. That could mean a company with non-cyclical earnings like Coles Group Ltd (ASX: COL) or the potential safe harbour of ASX gold shares like Saracen Minerals Holdings Limited (ASX: SAR).
