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S&P/ASX 200 Crashes: Stay calm and think rationally

The S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) has been crushed today in what will almost certainly be its fifth consecutive session in the red.

Following a much-needed Santa rally, the beginning of 2016 has been far from ideal for Australian investors with The Sydney Morning Herald reporting a total loss of more than $70 billion since the beginning of the year. The main bourse is down another 103 points or 2% today at just 5,020 points, a far cry from the 6,000 points some economists were forecasting by the end of the year.

Source: Google Finance

Source: Google Finance

Today’s heavy losses have come as a result of Beijing devaluing the yuan again while the Chinese government has intervened on the share market once again, suspending trade for the second time in four days after the CSI 300 Index plunged 7.2%.

BHP Billiton Limited (ASX: BHP) and Rio Tinto Limited (ASX: BHP) have been two of the biggest drags on the local market, shedding 4.2% each. BHP Billiton hit a low of $16.31 this afternoon which is just 6 cents above its 10-year low share price.

Meanwhile, all four of the major banks have slid deep into the red as well. Australia and New Zealand Banking Group (ASX: ANZ) and National Australia Bank Ltd. (ASX: NAB) have both lost more than 3%, while Westpac Banking Corp (ASX: WBC) and Commonwealth Bank of Australia (ASX: CBA) fell 2.7% and 2%, respectively.

Other blue chip shares such as Telstra Corporation Ltd (ASX: TLS) and Woolworths Limited (ASX: WOW) have also fallen 0.7% and 2.2%.

Indeed, these periods of extreme market volatility can be testing for even the most experienced investors. Losing money is never nice, especially when you don’t know how long it will last or how low share prices will fall. The important thing to remember however, is that investing success is achieved over the long term and selling shares out of panic could seriously hinder your progress.

Stay calm, think rationally and maybe even look to put some more money to work while shares in high-quality businesses are going cheap.

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Motley Fool contributor Ryan Newman has no position in any stocks mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. You can follow Ryan on Twitter @ASXvalueinvest.

The Motley Fool Australia has no position in any of the stocks mentioned. 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 Bruce Jackson.

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