The S & P / ASX 200 Index (ASX: XJO) fell 2.1% yesterday. I think this is an exciting time to find opportunities in the ASX stock market.
There are early indications that the ASX 200 could drop another 1% today, or at least start to drop 1%.
Why the fall of the ASX stock market excites me
The stock market is supposed 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 to invest new money in stocks, so being able to buy companies at lower prices is a good thing in my opinion.
Before this recent plunge, I’m sure most people would have said they would like cheaper prices or an opportunity to buy for better value.
But the ASX stock market is not going down for no reason. It is in times of uncertainty that company valuations fall. The only way to take advantage of lower prices like this is to actually invest at lower prices.
Trying to catch a falling knife?
Of course, there are fears that stock prices will continue to fall. It is certainly possible. You would need a crystal ball to know what will happen next.
There are two things I would say about the potential continued decline in prices. First, if investors only choose investments that they are sure to hold for the long term at a price that suits them, then an even lower price in the short term would not be too painful.
Second, investors can take an approach of investing regularly rather than doing it in a large lump sum. This is called the average cost in dollars. This gives more chances to invest at a lower price. But it could also mean missing out if prices recover and rise.
What are the opportunities in the ASX stock market?
There are a lot of quality companies that I would like to buy at lower prices like Pushpay Holdings Ltd (ASX: PPH), Redbubble Ltd (ASX: RBL), Adore Beauty Group Ltd (ASX: ABY), Ville Chic Collectif Ltée (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 ETFs from the global quality leaders Betashares (ASX: QLTY).
Investors could decide to buy more stocks than they already own, or use this drop as a chance to buy new names that they have considered.
I think lower prices are a good thing to find opportunities. There are plenty of ideas for where to look for ASX sharing ideas.