It's been a tough few weeks for Aussie investors.
Although they received some reprieve on Tuesday with the benchmark S&P/ASX 200 (INDEXASX: XJO) climbing 52 points, the relief was short-lived as the index once again dropped 38 points or 0.7% on Wednesday.
Wednesday's fall takes the market's decline since the beginning of the month to 4.5% — and there are still four days remaining in the month where it could fall even further!
The problem is, this might not seem like any normal pullback…
Everywhere you look right now you're bound to see some sort of bearish take on the Aussie economy.
- The dollar is plunging.
- The U.S. economy is strengthening.
- Iron ore prices are down 40% so far this year, which is also weighing heavily on investor sentiment.
Indeed, the very stocks that helped drive the market to new heights are also under enormous pressure. The big four banks, along with Telstra Corporation Ltd (ASX: TLS) and Woolworths Limited (ASX: WOW) are all declining heavily, leaving investors to wonder whether solid dividend yields have lost their appeal.
Who knows – they might have?
Then again, we Foolish investors know that some of the most dangerous (and useless) words in investing are "this time, it's different".
The new normal?
There's an old saying that goes 'economists have predicted nine of the last five recessions".
The fact is most economists are totally useless at predicting market falls. Sure, they might get lucky from time to time, but there are so many factors at play that it is simply impossible to be sure.
That's why we prefer the time in the market approach, as opposed to the notion of timing the market.
A full-blown recession?
As such, I'm not even going to bother suggesting whether or not I think there is a full-blown recession waiting around the corner. For all I know, there could be!
But I'm also willing to bet that this is simply another dip that won't even show up on the market's long-term chart. Although I don't like to see my portfolio fall in value, I'm still as confident as ever that it will grow strongly over time.
Besides, September has historically been a poor month for the Aussie market – who's to say it won't rebound strongly in October?
Here's what the smart investors are doing…
While the rest of the market seems to be running in fear, the smart investors are taking full advantage of these tumbling prices by stocking up on solid companies trading at discounted prices.
For instance, a few of the companies that have caught my eye recently are Greencross Limited (ASX: GXL) and Infomedia Limited (ASX: IFM), while I have also considered adding to my existing stakes in both Veda Group Ltd (ASX: VED) and Nearmap Ltd (ASX: NEA), which have both fallen in price more recently.
The Motley Fool's number 1 dividend stock – yours FREE!
All of these companies have the potential to deliver enormous returns over the coming years. While I already own Nearmap and Veda Group, Greencross and Infomedia are sitting firmly on my watchlist.
