Between 27 April and the 9 June the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) fell 8.55%, from a high of 5,982 to a low of 5,491, just 107 points away from a dreaded 10% CORRECTION. Of course, the point here is that the fall in the ASX during May was just shy of what the media would say constitutes a technical 'correction', something we haven't experienced since 2011, so will we experience an actual correction in 2015?
Will the ASX fall 10% in 2015?
There's as much chance in 2015 as there was in 2012, 2013 or 2014 that the ASX will fall 10%. In fact, share market commentators are saying the next correction could come from any of:
- A Greek exit from the Eurozone
- An Australian recession
- A rise in Australian inflation
- A rise in US interest rates
- The collapse of China's growth
- Another plunge in the iron ore price
- Another rise in the Australian dollar
- The burst of the current housing bubble
Interestingly, many of these risks above are exactly the same risks that have been with us for the last two years.
How should you prepare?
As we've seen this year, share price falls can happen swiftly, however those companies that operate in a growing industry, with a strong, proven management team, and a product that others can't easily compete with or replicate will perform best.
Here are 10 quality companies that easily outperformed the ASX 200 while it fell 8.55% and I would bet on outperforming if it fell another 10%:
- Carsales.com Ltd (ASX: CAR)
- Woodside Petroleum Limited (ASX: WPL)
- Sonic Healthcare Limited (ASX: SHL)
- SEEK Limited (ASX: SEK)
- James Hardie Industries plc (ASX: JHX)
- Amcor Limited (ASX: AMC)
- Brambles Limited (ASX: BXB)
- CSL Limited (ASX: CSL)
- Computershare Limited (ASX: CPU)
- Telstra Corporation Ltd (ASX: TLS)
Regular readers of fool.com.au would notice that many of the listed companies are the ones that are mentioned regularly as Buffett-worthy or Foolish companies because they all have 1) proven management teams, 2) a product that can't be easily replicated and 3) all operate in growing markets.
