Why I’m not afraid to invest in shares during this recession

I’m not afraid to invest in shares during this recession.

After the Australian Bureau of Statistics (ABS) confirmed that Australia’s economy contracted by 0.3% in the March 2020 quarter, it seems clear that the country will enter a recession when the June 2020 quarter number is revealed. Indeed, Treasurer Josh Frydenberg has said that Australia is in recession today.

Recessions signal that times are tough for many areas of the country. But you wouldn’t know it from looking at the S&P/ASX 200 Index (ASX: XJO). It’s up another 1.5% today, adding to the previous gains of over the past several weeks.

The country is in the middle of a pandemic-caused recession, but some investors are already looking ahead to the other side. And I think that’s what most investors should do too.

What happens in a 12-month period shouldn’t necessarily change your long-term thoughts about shares unless it permanently alters their prospects for the foreseeable future. Shares like Nextdc Ltd (ASX: NXT) and Pushpay Holdings Ltd (ASX: PPH) have actually seen their prospects strengthen because of the unfortunate events.  

When you look at shares like Wesfarmers Ltd (ASX: WES) you can see the share price is still lower than it was before the coronavirus even with interest rates lower and reliable trading for Bunnings and Officeworks.

Shares I’m looking to invest in

I have been investing throughout the market selloff and I’ll be continuing to invest in shares during this recession. I bought shares of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) when it was lower. I also bought shares of WAM Microcap Limited (ASX: WMI) and Magellan Global Trust (ASX: MGG) when they were lower.

I’d really like to invest in shares like Altium Limited (ASX: ALU) and MFF Capital Investments Ltd (ASX: MFF) if they were to fall back in value again. The strength of the Australian dollar makes me want to buy shares which generate earnings from America.

But for now I’ve got my eyes on mostly Australian shares because of how much of a better position the country is in terms of the coronavirus as well as things like a strong iron ore price and less people on jobkeeper.

More reading

• Here’s why long term investing can outperform shorter holding periods
• Top brokers name 3 ASX 200 shares to buy right now
• The smartest ASX 200 shares to buy with $2,500 today
• ASX 200 up 1%: Big four banks jump, Afterpay hits record high
• Are our ASX big miners on an earnings upgrade cycle?

Motley Fool contributor Tristan Harrison owns shares of Altium, Magellan Flagship Fund Ltd, MAGLOBTRST UNITS, WAM MICRO FPO, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended PUSHPAY FPO NZX and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of Altium and Wesfarmers Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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