The S&P/ASX 200 Index (ASX: XJO) and ASX shares have had a fairly decent month over July thus far. Even though we've still got Monday's session to go, as of Friday, the ASX 200 has gained a healthy 2.8% since the start of the month.
As such, many investors might be wondering if August will prove just as fruitful. This is understandable. We investors all like to see our wealth increase alongside the share market, after all.
But perhaps this isn't the train of thought that you should be hopping on. It's fine to hope that the markets will rise.
If you start worrying, or even worse, guessing, what the markets might do next, it could lead to some irrational and emotional decision-making when it comes to your share portfolio. Most of the broken dreams that lie on the side of the proverbial investing boulevard were shattered because of these kinds of decisions.
Say you think the markets are set for a rough August. That might prompt you to get spooked and sell out of your shares at an inopportune time. If August proves to be just as good as July, well, then you'll feel royally silly.
But say your prescient prediction comes true, and the ASX 200 does indeed have a terrible August. Then you have to flip the coin all over come November when trying to pick a side. You can see how this is a losing strategy long term.
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ASX shares: Keeping your eye on the long game
I think all ASX share investors should stop asking questions like, 'Will August be a good month for the share market'. What we should be asking ourselves instead is this: 'Do I still believe in the long-term compounding power of the share market to generate wealth?'
If the answer is yes, then you should be putting as much money as is prudent into ASX shares right now. If the answer is no, and you still think of the share market as some kind of giant zero-sum casino game, you're probably better off doing something else with your cash.
What we do know is that the ASX 200 tends to go up over time far more often than it goes down. It has also never failed to exceed a previous all-time high, as you can see below if you zoom out:
We investors put money to work in the share market because we have faith that ASX shares will do what they have always done. The only question we should be asking ourselves when it comes to shares investing is, 'Do we still believe that?'
