It seems the S&P/ASX 200 (INDEXASX: XJO) caught a severe case of 'Mondayitis' today. The ASX 200 closed down a hefty 2.25% today to 6,978.3 points. After last week's record highs, it's a bit of a jerk back to reality for the ASX.
Most ASX shares took a haircut today. Blue-chips like Wesfarmers Ltd (ASX: WES) and Woolworths Group Ltd (ASX: WOW) finished down 2.52% and 1.84% respectively.
In fact, the only group that seemed to record any major upside was the ASX gold miners (of course). Saracen Mineral Holdings Ltd (ASX: SAR) was the biggest winner, recording a 7.4% gain today.
But I've noticed that some ASX shares are responding far worse than others. Of course, for some ASX companies like Qantas Airways Ltd (ASX: QAN), the spread of the coronavirus is a direct threat to the company's bottom line and the market is responding somewhat rationally by lowering the companies' shares.
But many companies (that are not related to the travel industry) that you can pigeon-hole into 'ASX growth shares' are feeling the heat today.
Take Magellan Financial Group Ltd (ASX: MFG). Magellan shares copped a 6.08% beating today and are down to $68. Magellan has been a high-flying growth share in the financial sector and has consistently delivered market-beating returns over the past few years. Yet Magellan shares went through the wringer today.
Another high-flyer in recent times has been millennial-favourite Afterpay Ltd (ASX: APT). Afterpay shares were cut a painful 5.18% today. Fellow WAAAXers Altium Ltd (ASX: ALU) and Xero Ltd (ASX: XRO) didn't fare much better – they're down 4.48% and 4.35% respectively.
What does this tell us about 2020?
In the current bull-run markets have been enjoying in recent times, growth investing has become a popular investing strategy.
But as we saw above, growth investing can be a double-edged sword. The whole point of growth investing is finding shares that outperform the broader market. But these same shares have a tendency to underperform the broader market if we enter bearish territory. Today was a taste of that reality.
Foolish Takeaway
So if you're one of those investors who 'goes for growth' and you're heavy in shares like the WAAAXers and Magellan, I think it's prudent to be familiar with how your portfolio might perform in a bear market.
There's no free lunch in investing, so I think if you're heavy in growth shares, 2020 should be a year of caution.
