I believe investing in ASX shares is one of the best decisions that Aussies can make. However, I wouldn't invest in every ASX share.

There are certain sectors and types of businesses that I'd avoid investing in for my own portfolio. It's not because I don't think they can be good investments, but they don't match with how I want to invest or think about my investments.

My investment style may not be the same as yours. However, it works for me and I think it's worthwhile to consider what strategy would work for every investor, whether that's exchange-traded funds (ETFs) or individual ASX shares.

Let's get into what my dealbreakers are.

Invest in what I can understand

I'm not an industry expert in areas like retail or mining, but I think the operations and understanding what makes them succeed are understandable to me.

However, there are some sectors that I view as hard to read on what will help them become successful/maintain success. It can also be difficult to understand how competitors may be impacting the ASX share's market position too.

For me, as a main example, I'm avoiding ASX biotech shares such as CSL Ltd (ASX: CSL) and Telix Pharmaceuticals Ltd (ASX: TLX). They may have great futures, but challenges to existing healthcare products and the potential success of products in the pipeline are hard for me to gauge.

Only invest in ASX shares I think can grow profit in the future

There are a lot of businesses that Aussies can choose from.

Some businesses seem capable of growing profit every year – they can seem very attractive.

Other businesses may be going through a cyclical weak point and they may be likely to grow profit as conditions improve in the next few years. I think they can also make compelling medium-to-longer-term investments.

I think it can be dangerous to try to invest in businesses that are seeing long-term declines. Something being cheap doesn't necessarily mean it's going to turn things around. Some may be able to pull something off, but there's a high chance that it won't.

Try not to get caught up in FOMO

I like investing in growing ASX shares, but I wouldn't want to overpay at a price that doesn't make sense when taking into account a company's future.

Sometimes, a company's valuation can get ahead of itself and go beyond the prospects of what a business can achieve.

I think the market correction since February – which valuations have only partially recovered from – was healthy for the ASX share market.

But, I wouldn't buy something just because it has gone up a lot. At some point, those valuations can go through a significant reduction to more normal levels, as we've seen over the past two or three months.