Investors don’t know whether to buy or sell their ASX shares right now.
Tech and gold are surging higher but we’re seeing many industries struggle. Hospitality, travel and real estate have been hit hard by the coronavirus pandemic.
But if you’re a long-term investor, you have to ignore the short-term noise. Here’s why I think it’s a good time to buy and hold ASX shares right now.
Why you should buy and hold right now
Many first time investors are trying their hand at investing this year. A sub-section of those investors have started day trading – buying and selling stocks with very short holding periods.
That’s not investing, that’s just gambling. While the S&P/ASX 200 Index (ASX: XJO) has generally trended up over time, day by day fluctuations are somewhat random.
History has shown us that a buy and hold strategy can pay long-term dividends. Even experienced investors have been spooked by the recent bear market and looming economic headwinds.
However, I think now is the time to hold. Of course, the benchmark index is down (6.2%) in 2020 and you might be wary of purchasing ASX shares right now.
But a worse strategy than buy and hold is market timing. If you try and time the market with your entry and exit then you’re playing a fool’s game. I think you’re more likely to get burned on the way down as you wait for the bottom and on the way back up as you wait for a strong bull run.
That means a buy and hold strategy is a sensible move right now despite the market volatility.
Which ASX shares are good to buy and hold?
Once you’ve decided on your investing strategy, you have to choose your ASX shares to buy.
As mentioned, both tech and gold have been doing well. I think Nextdc Ltd (ASX: NXT) is one to watch in the data storage space while Newcrest Mining Limited (ASX: NCM) is a top gold producer.
If you’re after non-cyclical earnings, I like Coles Group Ltd (ASX: COL) as a solid buy with strong supermarket earnings.
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More reading
- 3 quality ASX shares for a beginner’s share portfolio
- These were the best performing ASX 200 shares last week
- ASX 200 falls 0.6%, REA Group reports
- Why the Coca-Cola share price and these ASX stocks just got upgraded by brokers to “buy”
- The latest ASX 200 stocks downgraded by top brokers
Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET. 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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