Oh dear…
The value of my house fell 2.5% overnight!
I can't explain it – no one can…
In fact, all I know is: It broke its resistance level, and now I'm nursing a loss of 10% for the year.
I can't bear it for another minute…
I'm going to uproot the family, take the kids out of school, and head for the hills with my shotgun and baked beans.
We'll put our money in a jar. And over the years, we'll survive off the land, but – most importantly – they'll be no volatility up there.
Time for a (Foolish) reality check
Just in case there was any doubt; I'm being sarcastic.
Today's 2.81% fall in the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) is nothing.
I mean, it's something if you're leveraged to the hilt with margin debt (buying shares using a loan) or have some exotic short-term trading program set up to manage your finances.
However, if you're a long-term Foolish investor – like me – guess what: Christmas has come early!
After all, am I really going out on a limb to say today's ASX 'market crash' of 2.81% will be short lived?
Worse case: I get it wrong, and the markets really crash.
Remember however that they say markets really crash only once every 7 to 9 years on average, so the chances I'm wrong are pretty slim.
Best case: I get the opportunity to buy cheap stocks.
One strategy to BEAT them all
Please do yourself a favour and remember the next graph. Save it, print it, and put it in your wallet for the next time the markets fall…
Source: Fidelity
That's a graph of the performance of Australian shares (All Ordinaries) over the 30 years to 30 June 2015.
You can click the image to zoom in, but all you really need to know is this:
The Australian sharemarket has returned an average of 10.8% per year since June 1985.
The Gulf war, 18% interest rates, Asia currency crisis, Dotcom boom and bust, The GFC and Channel 10's release of 'The Shire' are all terrible things which have occurred in that time.
Still, $10,000 invested in the market back in 1985 would be worth $219,730 today.
The shotgun cartridges and baked beans have probably gone off by now, and the money in the jar is still worth just $10,000 – or around $209,730 less than the money simply shoved into a stock market index fund.
Pity.
How to buy stocks in a falling market
Now, I'm not telling you to go out and buy any ol' stock in this market.
I'm certainly not telling you to buy BHP Billiton Limited (ASX: BHP), Fortescue Metals Group Limited (ASX: FMG) or Commonwealth Bank of Australia (ASX: CBA).
But if you're willing to invest long term and accept volatility is just part of the stockmarket's process, then consider making a purchase of shares in quality businesses that have stood the test of time…
SEEK Limited (ASX: SEK), ResMed Inc. (CHESS) (ASX: RMD) and Cochlear Ltd (ASX: COH) are some of our country's best companies, and today they're being discounted by the market, so put them on your buy list.
I know I have…
