Yesterday, the S&P/ASX 200 Index (ASX: XJO) had its worst day since the ‘Black Monday’ crash of 1987. We are barely above having an ASX 200 with a 4 in front of it, with the index closing at 5,002 points.
The ASX banks were smashed yesterday, with most of the big four bank share prices now approaching or even exceeding the lows that we saw in the global financial crisis over a decade ago.
It’s a stunning new chapter in this market crash, which (a timely reminder here) is still only a month old.
So I’m hoping that you readers haven’t kicked the proverbial investing bucket here and already sold out of all shares at a loss, because I want to discuss how best to invest during these crazy times.
I’m starting by religiously sticking to my plan. My plan has 3 simple rules:
- Find high-quality companies
- Buy them at an attractive price
I don’t like to sell companies and I don’t like to make bets.
Don’t get me wrong, during this time it has been rough looking at my portfolio’s value and seeing big losses.
But I have accepted that that is part of the deal when it comes to investing in shares. Trying to bypass the bad side (i.e. timing the market) usually ends in disaster in my experience, so I don’t bother trying.
Instead, I comfort myself with the knowledge that in the past, the ASX has come through everything that’s been thrown at it and consistently reached new record highs. And that includes several pandemic disease scares, the GFC, the Great Depression and two World Wars.
Now I’m not suggesting you follow my investing philosophy here, everyone is different, thinks differently and has different goals and risk tolerances.
But I think everyone should have a plan and stick with it through thick and thin. And the middle of a stock market crash is not the time to concoct a new plan for riding out the crash, in my view.
So ask yourself how you were investing in January (before the… soup hit the fan) and whether anything fundamental has changed with your goals.
If not, then soldier on!
This bleak time will pass as surely as all the other calamities the markets have seen in their long history did.
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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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