There has been a lot of volatility in the ASX stock market this year. I see opportunities to invest.
Low prices don’t usually stay low forever. Usually, as we last saw in 2020, most stock prices are rising again over time.
All of these impacts with inflation and interest rates make things unpredictable. It’s amazing how many big negative days there have been lately – most central banks have shown for some time that interest rates are rising fast. This is not new information.
There are some ASX stocks where I think the sell-off was well deserved. The likelihood of their long-term profitability has decreased.
Potential ASX sharing capabilities
I think there were very painful, oversold ASX shares that now look much better.
Names like Temple & Webster Group Ltd (ASX: TPW), Adore Beauty Group Ltd (ASX: ABY), City Chic Collective Ltd (ASX: CCX), Volpara Health Technologies Ltd. (ASX: VHT) and Australian Ethical Investment Limited (ASX: AEF) now look seriously cheaper than in 2021.
Of course, the above titles or any investment may continue to decline. There are no rules as to when recovery occurs or how low this reduction is.
I am optimistic about the future of the companies I mentioned, and today they are much lower, which is good for new investors.
In the long run, as investment should be, businesses that grow and invest in themselves should do well enough if their future looks profitable.
But I think some of the businesses that have fallen the most have greater return potential, as we saw after the collapse of COVID-19.
Where I invest
At the moment, for my own portfolio, I am considering ASX stocks that can diversify, have defensive business models and are worth well.
Some of the ASX stocks that can provide such protection and long-term protection are: Washington H. Soul Pattinson & Co., Ltd. (ASX: SOL), Brickworks Limited (ASX: BKW), Future Generation Investment Company Ltd (ASX: FGX) and L1 Long Short Fund Ltd. (ASX: LSF). WHSP is one ASX stock I recently invested in for my portfolio.
As a bonus, many of the above names are actually good dividend payers, especially if franking loans included.