The ASX has just had one of its worst weeks on record. Investors are fleeing for the exits.
The All Ordinaries (ASX: XAO) fell by around 3.3% on Friday and declined by 10% over the week. Ouch!
Investors who sold on Monday may be glad they got out at the start of the week, rather than holding on to the end of the week.
Some people may have protected themselves against very-short-term pain, but when will they re-enter the share market? When share prices are higher than they are today? Sitting in cash is not going to be fruitful the longer you have to hold it.
I'm not looking to sell. Indeed, it's very exciting to see almost every share at a lower price. Many commentators have been complaining about the high prices, including myself. Investors don't send share prices lower for fun, there has to be a reason to cause the sell-off. This period is the opportunity to buy.
Why I'm still buying ASX shares right now
Investing is not about what happens next week, next month or even for the rest of the year.
I'm decades away from retirement age and hopefully even longer away from the last time I check my portfolio. What happens in 2020 will be a distant memory in 2030 and 2040, just like the GFC is a distant memory now.
Look back over the past 15 years. The best time to buy shares was during the GFC precisely when people were dumping shares. Low valuations are a great thing for brave investors. But they're only opportunities if we take advantage of them. Otherwise those opportunities disappear and then you've missed it.
At the worst point in the GFC, the share market had fallen over 50%. It's unlikely this is going to turn into another GFC, so a 50% fall is very unlikely. Who knows how much the market is going to drop? It could be a total fall of 20%, or 30% or even more. We're already down a large fraction of the overall fall, we just don't know how much it will fall yet.
But, I like the prices that are being presented now. And if prices keep falling over the coming weeks then I'm going to keep buying. I'm avoiding the businesses that have precarious balance sheets. The quality shares are now better value, both here and abroad. It's the purchase price that ultimately decides our investment returns. And we are being offered a better purchase price.
