You'd need a crystal ball to know what's going to happen next with the S&P/ASX 200 Index (ASX: XJO). The coronavirus is impossible to predict.
Everyone has suddenly turned into an expert about pandemics. The latest daily infection numbers dictate what price investors are willing to buy (or sell) at.
But it's hard to look at past pandemics for answers because this infection is different. I mean to say that every outbreak is different. And our collective actions will create different results in each country as well.
Australia is, thankfully, having a markedly different experience to Europe and the US.
What will the ASX 200 do next?
Global investors didn't seem to care what was happening in China. The market finally took notice when Italy's healthcare system became overloaded.
The US will be the biggest test for the share market. America has a huge population, giant cities and the biggest economy. US investors have shrugged off the growing numbers in the past couple of weeks. But now the US is adding over 30,000 cases a day with over 1,000 deaths every 24 hours.
You'd think it's unlikely that the worst point of investor sentiment would come just one month into the share price falls. But the market has proven it can continually surprise in both positive and negative ways.
The best strategy is to invest for the long-term, only holding businesses you're comfortable to hold during times like this as well as the good times. It's best to take as much 'guesswork' out of investing as you can.
If I had to guess, I'd say there is one thing that could cause further heavy falls for the ASX 200 and why you should keep some investing powder dry. Over the next three weeks it will be clear whether the US infection growth numbers slow or keep growing with alarming compounding growth – China and Europe didn't simply slow it down by hoping that it would stop.
We learned today the Australia's strategy will be dictated by what happens over the next few weeks. If restrictions are lifted too soon it could cause a second wave which would dent investor confidence – nearly every Aussie is still susceptible to being infected thanks to how few infections there have actually been in this country.
But we just can't know for sure which way things will go because there are so many variables. We just have to try to make the right decisions for our portfolios.
Foolish takeaway
I'm hoping for the best, both on the healthcare side of things and economically. But I'm remaining aware that shares could drop again if the situation in the US gets even worse. I'm only investing in what I think are high-quality share ideas. And I did nibble with a small investment today – I'm positive for the long-term.
The best ASX growth shares are on sale! I think it's time to start buying cheap shares for the long-term.
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Returns as of 7/4/2020
Motley Fool contributor Tristan Harrison 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.
