Shares Go… Down?
“Meltdown: S&P/ASX 200 expected to crash lower on Thursday” – Yahoo!Finance
“The ASX is getting smashed, slumps 2%” – Business Insider (My Note: smash = 2%)
“Australian shares tumble as ‘significant correction’ looms” – ABC
I’ll grab the shotgun. You get the SPC Baked Beans. We’re going bush!
Overnight, the US markets took a modest tumble — at least 3% wiped off even the largest stocks in town, including Microsoft (down 5%), Netflix (down 8%) and Amazon (down 6%).
The catalyst behind the sell-off could be:
- Rising bond yields (higher yields make shares less attractive)
- The Trade War
- Market “jitters”
- All of the above
I did some digging and couldn’t find a genuine reason why some of the biggest companies in the world deserve to have fallen so hard. Perhaps they were just overdue?
Volatility Is The Price of Admission
In the short-term, the market is irrational. Meaning, all sharemarket investors should expect share prices to fall.
2%. 5%. 10%. It’ll happen. Worrying about when they’ll come is not worth the hassle because you know what?
Over the ultra-long-term markets have moved higher — not lower.
Despite wars, crashes, the GFC, Donald Trump and flared jeans — the market has risen over time.
As I told Rask Invest members today, “Days like this are the best days to be a long-term investor. Why? I’m licking my lips because some great businesses are now 5% — or even 10% — cheaper.”
I have a handful of great Aussie and international share ideas that seem to be getting cheaper — thus more valuable — each and every day.
For example, two names at the top of my watchlist are ASX-listed technology businesses with global exposure. They’re seriously attractive businesses — yet they nursing hefty losses today.
I can’t guarantee this sell-off won’t turn into the next GFC — the statisticians think we’re overdue — but more than half of my personal investment portfolio is in cash and ready to be put to action.
The Difference Between Price & Value
With a long-term (3+ years) view and the global economy ticking along nicely, I’m struggling to find reasons why I wouldn’t want to put my money to work in some of Australia’s — and the world’s — best companies.
As Warren Buffett said in his 1985 letter to shareholders, when shares of The Washington Post (WPC) were trading at 25% of their true value:
“Our advantage, rather, was attitude: we had learned from Ben Graham that the key to successful investing was the purchase of shares in good businesses when market prices were at a large discount from underlying business values.”
With market prices — not business valuations — taking a hit, now could be a great time to go on the hunt for bargains.
So that’s exactly what I’m doing…
Cheers to our financial futures!
Lead Adviser, Rask Invest
Disclosure: At the time of publishing, Owen Raszkiewicz does not hold a financial interest in any of the companies mentioned.
Disclaimer: This article contains general financial advice only. Please see the full disclaimer below.