The stock market is one of the best places to invest for long-term returns. That's why I'm not afraid of an S&P/ASX 200 Index (ASX: XJO) sell-off in 2024, 2025, or any other year.
There are different buyers and sellers each day who are reacting to individual company news or broader national/global economic events. Hence, it's normal for the ASX stock market to go through volatility, and I plan to keep investing regardless of it.
I wouldn't be surprised if there is a sell-off in the last few months of 2024.
Material developments relating to inflation or interest rates could change investor minds about what businesses are worth. The US election could also cause some disruption if events happen that investors weren't expecting.
Why I'll keep investing no matter what happens in ASX shares
It's not pleasant seeing our portfolios drop noticeably. It can cause us to want to sell and protect our wealth from further pain, but selling after a sell-off is probably the worst time to sell. I'd rather do the opposite in that situation – buy bargains.
I don't mind what occurs in the short term. I'm making investments for 10, 20, 30 years in the future. What happens in 2024 shouldn't matter for where my investment ends up in 2034. That's why I'm not scared about a crash in 2024 or any particular year.
For me, a share market decline signifies an opportunity. I try to only invest in assets that I'd be excited to buy more of at a lower price if they declined. When a market sell-off comes along, I'll be confident I can grab a bargain.
Warren Buffett, one of the world's greatest investors, has shared a number of useful pieces of advice about how to think of market declines, which I'll quote below:
Be fearful when others are greedy and greedy when others are fearful.
He also made an analogy relating hamburgers to the stock market:
To refer to a personal taste of mine, I'm going to buy hamburgers the rest of my life. When hamburgers go down in price, we sing the 'Hallelujah Chorus' in the Buffett household. When hamburgers go up in price, we weep. For most people, it's the same with everything in life they will be buying — except stocks. When stocks go down and you can get more for your money, people don't like them anymore.
Long-term investing today
Why continue investing today if the market hasn't dropped?
I see opportunities every day, which is why I write about appealing ASX shares each week. Over five or ten years, I think these investments could be worth significantly more than they are today.
I don't want to guess when the next decline will happen. There were surprisingly little stock market declines in the 2010s, so if investors had waited for a crash last decade, they would have missed out on huge returns.
So, I'm planning to keep investing and take advantage of any declines if they do happen. I'm positive about the future, while being aware that crashes could come along any time.
