ASX growth shares have had an ordinary time of late, with the S&P/ASX All Technology Index (ASX: XTX) dropping more than 16% since its February high.
On Monday alone, the index fell 2.61%.
For many of the 435,000 Australians who bought shares for the first time last year, this will be the first time they experience losses.
It's a costly lesson for the rookies, according to Bell Potter director of institutional sales and trading Richard Coppleson.
"A few months ago, this cohort of investors was stuffing their pockets with 'upside momentum' stocks, thinking valuations for everything they bought could only climb," he told subscribers to his Coppo Report.
"You can sense that many retail punters are feeling stock market pain for the first time… For many, this experience will be completely bewildering."
Unfortunately, in the long run, it's not just the novices that will suffer.
According to Coppleson, the future is now dire for growth stocks.
ASX growth share recovery will be hampered
Coppleson told his subscribers that each growth stock would have a massive crowd of disillusioned novice shareholders seeking to exit their positions.
But they don't want to do it at a loss, so they're waiting for the stock price to return to their purchase price.
"Some who bought higher will wait until they get back to their entry level and then sell – and they'll be happy to get their money back before moving on," he said.
"But it means that with every rally from now on, there will be walls of selling that will slow the rebounds."
So even when good news arrives, and a price spike is justified, it will be structurally dampened. A wave of shareholders wanting to sell out will always cancel out any prevailing enthusiasm for the stock.
"Most stocks will not bounce back in a 'V' but will hopefully rise very slowly – so slowly that they may look boring."
Patience is the only way
Coppleson reminded his subscribers that playing the long game is the only way to build wealth.
"Investing is not easy. It's hard, takes patience, and the market always has a way of humbling you," he said.
"The market has an amazing ability to crush the hubris of those who claim an ability to 'time the market' or who maintain that buy-and-hold is for losers – they often then suffer a period of getting it unbearably wrong soon after professing such things."
This is because no one is a fortune teller who can time the market.
"With all investing, if you think it can only go one way, then it suddenly turns – and you believe you'll be able to get out before it goes south – you're in a delusional fantasy land."
For example, Coppleson has owned Afterpay Ltd (ASX: APT) for many years and has "a long-term vision" for the business.
"I have been able to absorb the body blows that come with these stocks and have withstood many -30% selloffs along the way," he said.
"If you're a buy-and-hold investor, the rallies are satisfying to see, but the selloffs are also tolerated as just being part of the voyage that you are on."
The one hint that a correction may come is when share prices double in a very short space of time.
"Like Zip Co Ltd (ASX: Z1P), which went from $5 to $14.70 in just a few months. This was just too fast, and as I said when it hit $14, it was close to a big pullback," said Coppleson.
"Back in December when the stock was trading at $5.20 and it looked terrible, I pushed as a BUY for the first time ever."
