When the doomsters rule, The Motley Fool see opportunity. Don’t miss it.
The headlines are scary.
“Stocks crash in US rout.”
“Wall Street sinks more than 600 points, the sixth biggest point drop in history.”
“Australia stocks enter bear market.”
“$50 billion wiped off market.”
The stock market, and the Australian dollar (AUD) have been in a downward spiral for a couple of weeks.
It hurts. Seeing thousands wiped off the value of your super fund, and/or your share portfolio is never fun.
Amidst the carnage, the fear, and the panic, here at The Motley Fool, we’ve been urging investors to remain calm.
And despite the massive, and potentially ongoing market falls, our message remains the same, perhaps boringly so.
For that, we make no apologies. If it’s fear you want to read about, you’ve come to the wrong place. If it’s how you should sell all your stocks now, before it’s too late, you’re in the wrong place.
If nothing else, the GFC should have taught us that markets can go down, as well as up.
But more than that, they should have told us that selling when fear is at its height is completely the wrong thing to do.
In the coming weeks, we don’t know if the stock market will go up, down further or stabilise.
Timing is not our forte, something for which we make no apologies. People who’ve seen our free report Read this before the market crashes should know that already.
Bears rule today, but bulls will be back
What we do know is this…in the short-term, markets trade on greed and fear. The bears rule today. But the bulls will be back.
We also know the Australian economy is the envy of the world. Sure, a global recession will hurt us, but unlike the U.S. and Europe, we’ve got plenty of levers to pull.
The markets are talking about our interest rates being cut, perhaps by as much as 0.5%. Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corporation (ASX: WBC) have already cut their fixed rate home loans. It will be music to home-owners ears.
Despite the political scare campaign, the reality is Australia’s finances remain in good heath. Only this week, the International Monetary Fund said we could create a second budget stimulus package if there is another global economic collapse.
And then there’s China, the world’s next super-power. Our long-term fortunes are much more tied to their economy than the U.S. and Europe. If you were going to back any horse in that race, China’s the one to get on.
Our Foolish bottom line
Stock market crashes don’t come without monetary and economic pain.
But worrying and panicking is not going to change a thing. And from a big picture perspective, Australia has a lot going for it.
When it comes to investing, our advice is the same as it was last week. Don’t let your emotions take control. Remain calm.
At these levels, we suggest you should start buying stocks, like the three highlighted last week. They are even cheaper today.
Never spend all your cash all at once. You may get a chance to buy your favourite stocks even cheaper.
But don’t waste the opportunity. Some investors wait a lifetime for a stock market crash to come around. Having two in the space of three years is nirvana for the cool, calm, focused, long-term investor.
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