If you're planning for your retirement, it can be scary looking at ASX shares right now. The S&P/ASX 200 Index (ASX: XJO) is down 25.22% since the start of March as coronavirus concerns have gripped markets.
But the truth is that while there has been a big sell-off and we're officially in a bear market, there could be great buying opportunities for your retirement portfolio.
Which ASX shares are worth watching right now?
There's no doubt it's a scary time for investors. Even for long-time investors, watching ASX shares in freefall can be concerning. As much as we tell ourselves to invest long-term, human psychology takes over in times like these. But it's best to be rational and stay calm when investing for your future.
It pays to look back in time to realise that market corrections do happen. Recessions do happen. The reality is that a buy and hold strategy has held true for the last 100 years. Economic cycles come and go, it's just that this one will be compounded by the pandemic.
The S&P/ASX 200 reached its lowest point of the GFC in March 2009, when it hit 3,145.50 points. That means that even after the recent share price declines, the ASX 200 has gained 53.13%. Even if you had bought an index-tracking portfolio in October 2008, you'd still have seen a tidy return. It's the same story for many of the ASX 200 blue-chip shares.
Macquarie Group Ltd (ASX: MQG) shares were absolutely hammered in the GFC. The bank's share price hit $17.26 on 6 March 2009 but hit a $152.35 per share 52-week high in February. There are plenty of other examples of distressed companies that turned out to be great buys.
Looking at the markets right now, we can see almost all sectors under pressure. However, steep sell-offs can be a sign that investors are spooked. It's quite rare that double-digit share price drops appropriately value a company afterwards. We've seen that this week with CIMIC Group Ltd (ASX: CIM) shares plummeting 36.44% on Thursday before bouncing back 51.15% on Friday.
How to set yourself up for retirement in a bear market
If you're looking at retirement in the next 10-20 years, you might be worried. That's understandable, but markets will bounce back from this. How much further the ASX 200 has to fall, no one knows. However, a diversified portfolio and long-term outlook are key for maintaining and building wealth.
You can set yourself up for retirement in a bear market like this. Keep an eye on ASX shares that have been hammered lower for tactical buying opportunities. Think about which sectors might benefit from the changes that come out of this COVID-19 pandemic. I think NEXTDC Ltd (ASX: NXT) shares could be worth a look as companies look at data centre operators to sure up their remote working capabilities and data security going forward.
