I think it's getting harder to invest in shares right now.
Many ASX shares have performed very strongly ever since the market bottomed on 23 March 2020.
Look at some of the strongest performing ASX shares. The Afterpay Ltd (ASX: APT) share price has gone above $70. The Appen Ltd (ASX: APX) share price is above $35. The Xero Limited (ASX: XRO) share price is above $90.
Those three names I mentioned are three of the ASX's most promising businesses. They're growing internationally very strongly. Those three are above where they were just before COVID-19 impacted the share market.
Shares like Wesfarmers Ltd (ASX: WES) and APA Group (ASX: APA) have recovered from the selloff and are now almost back to previous levels.
I think the recovery is largely justified for plenty of shares. Many shares have reported that customer activity is the same, if not higher, than pre-COVID levels. Add in the incredibly low official interest rates – valuations should be higher due to that.
Shares such as Adairs Ltd (ASX: ADH), Nick Scali Limited (ASX: NCK), JB Hi-Fi Limited (ASX: JBH) and Harvey Norman Holdings Limited (ASX: HVN) are reporting higher sales. Perhaps that can be put down to all of the government stimulus, but their revenue is going up nonetheless. I would have expected revenue to fall for those types of consumer discretionary businesses during a pandemic and a recession. If a business is doing better than expected then its share price should rise.
How do you invest during this environment?
During the time of the COVID-19 share market selloff in March I was encouraging investors to try to pick up bargains. Some ASX shares like Pro Medicus Limited (ASX: PME) looked as though they had been too heavily sold off.
As the market recovered I also pointed out shares like Pushpay Holdings Ltd (ASX: PPH) which seemed unfairly sold off and the terrible circumstances may in-fact accelerate Pushpay's growth. Pushpay has rocketed since then, so I'm not sure that it's an obvious buy anymore, though I still believe it has a great long-term future. These types of accelerated-growth opportunities are disappearing as the market bids them up.
For the rest of the share market, there is still so much uncertainty.
How much is the unemployment rate and consumer spending being supported by the jobkeeper program? Jobkeeper is due to finish in less than three months. Jobkeeper can't go on forever, but there are worries that the country faces a financial cliff.
How much will the new Victorian COVID-19 outbreak setback the overall economic national picture?
Is the NSW outbreak on the verge of turning into something like Victoria's in a couple of weeks?
Will the US' massive infection numbers start overwhelming certain areas of the country like how New York was overwhelmed a few months ago?
It's important to recognise that there is always going to be uncertainty with the share market. There has always been something to worry about over the past decade. Greece, ISIS, Brexit, the trade war and so on. That's why you have to think long-term with shares. Sometimes investors have to climb a 'wall of worry'.
You don't have to invest right away
We live in a world of instant news, instant reactions – an information overload. You may feel like you need to do something with your portfolio in July. But you don't have to. No-one is forcing you to push the 'buy' button on shares. You can be patient.
Warren Buffett has a great quote – he has a quote for everything, right? – saying that you don't have to swing at every pitch:
"The trick in investing is just to sit there and watch pitch after pitch go by and wait for the one right in your sweet spot. And if people are yelling, 'Swing, you bum!,' ignore them."
Your 30-year returns aren't going to be massively impacted whether you decided to invest in July 2020 or November 2020. I think there are going to be more opportunities later this year, particularly when the US election comes around.
I will keep investing each month if I see long-term opportunities, such as Bubs Australia Ltd (ASX: BUB). If you see a good opportunity, go for it. But I'm now saving some investing cash for later in the year.
