For anyone with a financial interest in ASX shares and the share market in general, it's been an incredible month. Since mid-February, the S&P/ASX 200 Index (ASX: XJO) has lost over 30% of its value. And unlike the bear markets that preceded it, this crash has been sudden and brutal.
For some context, the ASX 200 lost around 50% of its value back in 2008 and 2009 – but this fall took 18 months to fully play out. We're only at the one-month mark and already we are at a 30% drop.
But it's not the descend down that's the most exhausting thing about this bear market (for this writer anyway) – although it doesn't help. It's the volatility, the whipsawing between huge gains one day, followed by huge losses the next, that really gives this investor a whiplash headache.
Each day the ASX gains, it prompts pondering over whether we've 'reached the bottom'. Those investors who've 'gone to cash and are waiting for the bottom' must be pulling their hair out by now (a major reason why we Fools recommend against this strategy).
Even today, the ASX 200 is up 2.5% (at the time of writing). We've seen some amazing moves on the markets just today – Afterpay Ltd (ASX: APT) for example was up as much as 62% just today. That follows a 24% plunge yesterday. It's enough to cause a serious case of motion sickness
How to invest when you get ASX whiplash
Unfortunately, this extreme volatility is likely to be around for some time yet. Investors are trying to work out exactly how much the coronavirus situation is going to affect different companies and the economy in general.
Different scenarios are being priced in all the time – it might be 'business as usual' in a month one day – and an extended six-month shut down the next. One day, a business might announce layoffs, and the next, the Reserve Bank of Australia takes 'unprecedented action' to stabilise financial markets.
No one really knows, and that's why we are seeing the whipsawing.
This bear market has come as a shock to most investors who had become accustomed to stocks only ever going up.
But although it doesn't feel like it, volatile times like what we are seeing are a normal part of investing in shares – they do happen from time to time, and they always go away after a while.
The only thing we can do as investors is wait patiently – and perhaps spend some cash on our favourite ASX shares when they go on sale.
