Things have certainly taken a turn for the worse on the ASX boards this Thursday. After modest rises for the S&P/ASX 200 Index (ASX: XJO) over the past two trading days, investors might have been lulled into a sense of complacency. That went out the window this morning when the markets opened and the selling of ASX shares started.
At the time of writing, the ASX 200 is now down a nasty 1.6% at just above 8,500 points. This latest fall puts the Australian share market's losses sine 2 March at a horrid 7.5%.
A fall of this magnitude over just a few weeks means that a lot of investor shave been selling their ASX shares. Those that haven't have probably taken a significant haircut in the values of their investing portfolios. At least on paper.
The US-Iran War shows no signs of ending any time soon. Over the past 24 hours, there have been attacks on many energy facilities across the Middle East, which has driven the price of Brent crude oil back over US$110 a barrel. That's almost double the US$60 that barrel was going for back in early January.
It wouldn't be hard to conclude things might get more dicey before they get better. If that's the case, should ASX investors think about selling their ASX shares today before things get even worse?
Image source: Getty Images
Is it time to start selling ASX shares?
I think investors who are debating this question need to reconsider why they are investing in the first place. We buy ASX shares to profit from a business' earnings, and by doing so, grow our long-term wealth. Owning a company's shares gives one the right to a portion of its earnings from today until, at least in theory, the end of time.
Yes, the global economy is reeling from a severe energy shock. It could have serious consequences. It already has. But history tells us time and time again that selling ASX shares during a crisis is almost always a poor decision. For one, the markets have seen it all before. We had severe energy shocks back in the 1970s. The markets recovered to push higher. We've had a litany of wars over the past few decades. We've had inflation, recessions and even a pandemic. Yet despite this, the ASX 200 was at a new all-time high less than three weeks ago.
None of can predict the future and know what will happen on the markets tomorrow, next week, next month or in 2027. Yet we can all look at the past and see what the best decisions were in hindsight. The choice that has, and has always had, the greatest chance of maximising your long-term wealth is to buy, and not sell, when prices are low.
