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How I’m investing in ASX shares in 2020

Sebastian Bowen

There’s only a few days left of the year and the decade, and we’ve just capped off one of the best years in memory for ASX shares. The ALL ORDINARIES (INDEXASX: XAO) started the year at 5,625.6 points but looks to end the year at all-time highs – just shy of 7,000 points.

It’s a great time to be invested, to be sure. ASX shares of all colours have enjoyed big gains in 2019. WAAAX growth shares like Afterpay Ltd (ASX: APT) and Xero Limited (ASX: XRO) have banked double-digit gains. Even ASX blue-chips like Woolworths Group Ltd (ASX: WOW) have seen significant price appreciation. WOW shares are on track (at the time of writing) for a 2019 gain of 30%.

So by all accounts, it should be full-steam ahead into the new decade.

But I’m heading into 2020 with a ‘cautious optimism’ approach.

The great investor Warren Buffett likes to ‘be fearful when others are greedy’. Since the markets look set to bank gains close to 30% for the year, I expect a lot of excitement, exuberance and anticipation of further gains next year.

It feels a little too similar to 2007 and 1999 – and we all know how that ended.

Now I’m not a harbinger of doom and I’m certainly not foolish enough to tell you that markets are going to a certain fiery domain in a handbasket in 2020. But I also like to draw on history in thinking about the future. With 10 years of ‘up’ from the markets, I think a healthy dose of caution is most certainly warranted.

Now, I’m still watching my favourite ASX shares like CSL Limited (ASX: CSL) and Altium Limited (ASX: ALU) for a buying opportunity.

And I’m certainly not planning on selling some of my favourite dividend-paying investments like Washington H. Soul Pattinson & Co Ltd (ASX: SOL) or WAM Global Ltd (ASX: WGB).

But I am planning on keeping a big chunk of cash on the sidelines for a rainy day (despite our low interest rates). And I also plan on building up some hedge assets as insurance. The Vanguard Australian Fixed Interest Index ETF (ASX: VAF) and the ETFS Physical Gold ETF (ASX: GOLD) come to mind.

Foolish takeaway

Anyone who tells you what the markets will do next week, next year or next decade is a charlatan – so that’s not what this writer is trying to bring to the table. But I prefer my own portfolio to be ready for anything – and I’m weighing up possibilities for 2020 and adjusting accordingly.

The post How I’m investing in ASX shares in 2020 appeared first on Motley Fool Australia.

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Sebastian Bowen owns shares of WAMGLOBAL FPO and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO and CSL Ltd. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of Altium and Xero. 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.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019