The bad week for ASX shares that started yesterday has just gotten worse.
The S&P/ASX 200 Index (INDEXASX: XJO) is down another 1.3% today to 6,885 points. Seeing as we were only looking at breaking through the 7,200 point mark last week, this drop is starting to look like a correction.
And the cause seems to be fears over the spread of the coronavirus. Although we have known about this grave situation for over a month now, it's only been this week where markets seem to have stopped shrugging it off and started getting a little spooked.
Probably not assisting has been the unexpectedly strong success of 'democratic socialist' Bernie Sanders over in the US. Sanders is fighting to secure the Democratic Party's nomination for the 2020 Presidential election (to be held in November) and has just convincingly won the Nevada caucus vote. Whilst you might have your own opinions about Sanders, there's no doubt his policies aren't exactly 'Wall Street friendly'.
It's the combination of these two factors that (in my opinion) is causing the stock market gyrations in the US, and of course, here on the ASX as well.
Should we be worried about our ASX shares?
Firstly, it's important to note that the stock market isn't always rational, and whatever you, I or anyone else thinks can or should happen with shares might well not happen at all. It might even do the opposite.
But I do think that the coronavirus will have little long-term impact on the many good quality ASX shares on the markets. There have been many awful disease epidemics (even pandemics) in history – SARS, swine flu, bird flu, MERS (camel flu) and Spanish flu to name a few. But none of these have dented the long-term prospects of ASX shares.
Just to be clear, I'm not taking away from the very real human impacts coronavirus or any other disease is having or has had. It's a dreadful time for the world in general and especially China. But history tells us that from an investing lens, disease outbreaks generally don't make a long-term impact on the share market.
As for Bernie Sanders, I'm not too worried about the impacts his candidacy may have on the share market. Even if Sanders wins the nomination and the presidency, the American political framework doesn't allow the president to do too much in domestic policy without the support of congress. And I doubt that a majority of congressmen and women will hop on board a full-steam Bernietrain even if he does win.
Foolish takeaway
For the reasons discussed above, I still think investing in the Australian stock market is a great long-term move, and this week's volatility might provide a perfect opportunity to pick up some of your favourite ASX shares on the cheap.
We don't know what will happen tomorrow, next week or next year, but we can find good quality companies to invest in today (perhaps at a great price too).
