ASX 200 shares sink to 6-month low. Time to buy?

It might be time to start buying up more ASX shares while they're on sale…

| More on:
A man clasps his hands together while he looks upwards and sideways pondering how the Betashares Nasdaq 100 ETF performed in the 2022 financial year

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The S&P/ASX 200 Index (ASX: XJO) and ASX 200 shares have spent this Tuesday going from bad to worse so far. Yesterday, the ASX 200 opened the trading week on a negative note, slipping by 0.2%. But today thus far, ASX investors have stepped down on the selling pedal.

At the time of writing, the ASX 200 has tanked by a horrid 1.38%, dragging the index to below 7,000 points at 6,936.3 points at present. This is the first time in six months that the ASX 200 has fallen below 7,000 points. Yep, you'd have to go back to late March to find the last time the ASX 200 was at these kinds of levels.

It also means the index has tanked by more than 7% since it climbed over 7,400 points in early August. See that yourself below:

ASX 200 performance

It's not hard to see why investors are getting nervous. There hasn't been a lot of good economic news of late. Oil prices have been surging, adding to inflation. That is prompting predictions that interest rates might have to keep on rising, which will continue to weigh on economic growth.

We can tell that investors are getting nervous because at the same time markets are falling, global bond yields are rising sharply.

Indeed, we'll see how our own Reserve Bank of Australia (RBA) reacts to these economic pressures this afternoon with its October interest rates decision.

So with the ASX and ASX 200 shares at this six-month low, many investors might be wondering whether it's time to start buying. After all, the legendary Warren Buffett famously once said, "Be greedy when others are fearful." And it's pretty clear that there's a lot of fear going around right now.

Is it time to buy ASX 200 shares yet?

I think investors should heed Buffett's advice and indeed start buying shares if they are able. ASX 200 shares, as a whole, are now 7% cheaper than what they were only back in July.

That's not to say they can't fall even further. For all I (or anyone else knows), we could see another 7% drop over the coming two months. But I'll be buying ASX shares then, and now, if I could.

The fact is there is always something to worry about on the stock market. So when investors take these worries to heart, it's often a great time to buy our favourite shares at a discounted price.

But don't take it from me; take it from our chief investment officer Scott Phillips. Here's some of what Scott told investors late last month:

If you could be a student of history for just a little while. If you could chart the steady, upward, and (stonkingly incredible) compound returns of the stock market over the last century- and-a-quarter.

No, not every day. Or week. Or month. Or year.

But over the long term.

We haven't passed capitalism's peak, I suggested, and so it was reasonable to expect better returns in future.

There were no shortage of times in the past when people wondered if it was all over. World Wars. Oil Shocks. Countless recessions. Market crashes. Terrorism. And the ceaseless, breathless, negative headlines, perhaps bettered only by the ceaseless, baseless, predictions of market doom.

Instead, markets have continued to flourish, over the long term, despite all of those things.

And you think that the music will finally, somehow, stop… this time?

I don't. And I don't think you should either.

Motley Fool contributor Sebastian Bowen has positions in Berkshire Hathaway. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Berkshire Hathaway. The Motley Fool Australia has recommended Berkshire Hathaway. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on How to invest

Man puts arm around woman and kisses her cheek outside their new home
How to invest

How to build a $100,000 ASX share portfolio from scratch

You may be surprised how quickly you could reach this goal.

Read more »

asx share price fall represented by investor with head in hands
How to invest

Should you sell you ASX shares if you think a stock market crash is coming?

Can we ever predict a market crash?

Read more »

A happy young couple lie on a wooden deck using a skateboard for a pillow.
How to invest

How to build wealth with ASX shares without taking big risks

Many investors believe they need to chase high-risk, speculative ASX shares to grow their wealth quickly. But in reality, most…

Read more »

Happy man holding Australian dollar notes, representing dividends.
How to invest

How $500 a month in ASX shares could become $1 million

It might not be as hard as you think to become a millionaire through the share market.

Read more »

Man pointing an upward line on a bar graph symbolising a rising share price.
How to invest

How to invest when the ASX hits a record high

Worried about buying at today's prices? Here's why you shouldn't be concerned.

Read more »

A man wearing glasses sits back in his desk chair with his hands behind his head staring smiling at his computer screens as the ASX share prices keep rising
How to invest

Lessons from a self-made ASX millionaire

Here's how he did it.

Read more »

A couple cheers as they sit on their lounge looking at their laptop and reading about the rising Redbubble share price
How to invest

$20,000 in savings? Here's how to target $1,000 of passive income each month

This could be the easiest way to build a meaningful passive income from the share market.

Read more »

Three happy office workers cheer as they read about good financial news on a laptop.
How to invest

The 3 rules new ASX share investors should always follow

These rules could help you generate wealth in the share market.

Read more »