The week ended just as it has begun for the Australian sharemarket.
In what can only be described as a 'frenzy' for the exits, local equities were sold off en masse on Friday, just as they had been on Monday, despite the strong surge experienced in the days between. The end result was a marginal loss of 0.1% for the benchmark S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) in what was a truly volatile and unnerving week for anxious investors.
Unfortunately, it isn't only one issue causing all this unrest. While the primary concern amongst investors right now is the impact that a potential 'Grexit' (i.e. Greece exiting the Eurozone) will have on the global economy – and Australia in particular – investors are also justifiably worried about crashing commodity prices, a Chinese slowdown and a questionable outlook for the local economy.
To top that off, investors are growing uneasy about a raft of company downgrades in the lead-up to reporting season with some big-name corporations such as Woolworths Limited (ASX: WOW), Flight Centre Travel Group Ltd (ASX: FLT), Metcash Limited (ASX: MTS) and REA Group Limited (ASX: REA) all 'confessing' to being unable to meet their overly optimistic guidance.
Indeed, these issues haven't only been playing on the minds of investors over the last week. As highlighted by the Fairfax press, the benchmark index suffered its worst three-month stretch since September 2011 in the period to 30 June, with a massive 7.3% of the market's value simply wiped away.
Your opportunity to strike it rich
It can be extremely difficult to just sit by and watch as your portfolio gets thrown around like a rag-doll. Luckily, my portfolio is well-diversified so the impact has been manageable, but it can still be a challenge to simply sit on your hands and avoid the temptation to 'sell' stocks to lock in profits and minimise the potential for further losses.
In reality however, that's what investing is all about. It's in the nature of stock markets to fluctuate, and the higher level of volatility associated with equities than other asset classes is also what makes it possible to achieve higher returns in the first place.
As my colleague Mike King stated perfectly last week, "Those investors panicking and selling out (as the market shudders) really need to consider whether they are cut out for investing and perhaps think about handing their portfolios over to low-cost index fund managers."
As violent as the market has been in recent times, it's highly likely that we'll look back in a couple of years' time and not even recognise this as a blip on the radar. There's a good chance that the market will recognise that the Greek threat was well and truly blown out of proportion while a number of stocks will have gone on to set fresh all-time highs well above their current levels, making investors who hold on a sweet fortune in the process.
Of course, there is no telling just how long this round of volatility will last, nor is it possible to tell how much damage will be caused. But it couldn't be more obvious that there are a number of bargain opportunities currently presenting themselves to investors willing to take that chance which could prove to have be a smart decision in the years to come.
The smart money is looking for up-and-coming smaller companies with huge potential
