Are you worried about the share market? You don't have to be that worried, there are plenty of reasons to be positive about the share market.
Investors have been heavily selling off shares indiscriminately for almost a month now. At some point there will be a large turn around.
Despite the positive finish by the S&P/ASX 200 Index (ASX: XJO) today, it's still down by 26% since 21 February 2020. Perhaps there will be some more heavy selling by the end of the week?
I think there are three separate things that people need to think about, and it's important to keep those things separate in your mind. There's the movement of share prices. There's the economy. And there's the number of infection cases & deaths. Whilst each of these things are linked, they are not going to get worse simultaneously, or better simultaneously, in my opinion.
The share market usually worsens ahead of an economic decline and will similarly recover quicker than the economy.
Not only are these lower share prices attractive, but I think these are some of the best reasons to be positive:
Large western nations are finally working on limiting the spread
Shares have very powerful compounding power. This infection also seems to have very powerful compounding affects because of its ability to spread strongly early on in someone's infection and how some people may not yet symptoms whilst they're spreading it.
However, with Europe and the US now locking down and telling citizens to avoid crowded spaces, the coronavirus will be hopefully be spread slower and we can 'flatten the curve'.
The sooner the spread can be controlled, the sooner life can go back to relatively normal.
Scientists and healthcare companies are working on vaccines
Many investors may be fearing how far the coronavirus may spread before it's brought under control.
There are plenty of teams of healthcare scientists around the world trying to come up with a vaccine or another type of healthcare product that can help give people better outcomes against the infection.
It only takes one breakthrough for the tide to be potentially shifted from uncontrolled spreading to limited spreading. A victory like that could mean nationwide lockdowns are no longer necessary, which would be good for lives, hospitals and the economy. A vaccine for the public may be many months away though.
Interest rates are very low
Interest rates are now extremely low around the world. In Australia, in the US, in Europe, in Japan, everywhere.
Protection against capital loss with cash is good for the short-term if you're able to time markets. But for the long-term these ultra-low interest rates make the current share prices seem very cheap and things are only getting cheaper. At some point, perhaps this week, it will be a good idea to put some of that cash to work.
It's going to be very hard for central banks to raise interest rates again when this is over, so we could see sub-1% rates for quite a while.
Whilst lower interest rates are not good for shares like Commonwealth Bank of Australia (ASX: CBA) and Computershare Limited (ASX: CPU), it is good news for all the other top shares that now look pretty cheap such as Altium Limited (ASX: ALU) and Australian Ethical Investment Limited (ASX: AEF).
Foolish takeaway
Plenty of people wish they could have invested during the GFC and picked up lots of bargains. Well, there are opportunities being presented to investors each week now as the market gets more fearful. I invested yet again today and will keep buying when I see something that's too good to miss.
