Worried about a market crash? You shouldn't be and here's why

In times of market turmoil, it's easy to be sucked in by news headlines such as:

Investors dump Aussie shares

More ASX pain is 'inevitable'

ASX losses top $30b

Biggest share drop since Brexit, dollar takes a beating

And so on and so on …

Don't let the headlines scare you because as well as adopting the tried-and-tested strategies of:

• buying businesses and not tickers,
• buying shares when they're inexpensive, and
• holding quality businesses through good times and bad,

you should also know an important fact about the shares you own.

Here are five of the more popular stocks held on the ASX with the total number of shares on issue for each …

… and here are another five second-tier stocks, again listed here with the number of shares on issue:

* obtained from each company's annual report to 30 June 2016

Now, to understand market movements of your shares in context, you should next look at the volume of shares traded that actually resulted in the price movements you saw on Monday 12 September 2016:

So, with a little perspective, you can see that in the midst of what looks to be quite a dramatic downward correction in share prices, the (vast) majority of shareholders in each of the companies above did precisely … nothing.

Yes, nothing.

In other words, shareholders owning 99.5% or more of the shares in the above stocks were simply too busy going to work, running their own business, and/or simply getting on with life. The more financially-independent holders of the above stocks may well have been boarding their flight for Hawaii rather than contributing to market mayhem.

It's very probable then that the shares you own have also suffered on Monday based on the perspectives of a truly insignificant proportion of the shareholder base.

Foolish takeaway

I would suggest that you can safely ignore what other shareholders on the register are doing with their money.

Whether shareholders owning a miniscule half of one percent or less of the issued shares decide to sell their shares should have no bearing on your position in the company and your outlook for the economic well-being for the business.

Focusing on business fundamentals though doesn't create the same sort of excitement as watching a 2.3% (or 120 point) fall on the S&P/ASX 200 (INDEXASX: XJO), as it did on Monday.

As always, get to know your companies, understand their material announcements to the market, and then decide whether to buy, hold or sell your shares (if you must) on what the company tells you, not its shareholders.

When shareholders owning 99.5% of the ordinary shares do nothing is, I think, one of the few times it's safe to act with the herd.

By doing nothing, you're doing something, and that is allowing your capital to grow in lockstep with the company's business performance … over time. And the more time you can allow your money to be invested, the better.

Ignore price movements like Monday's. They simply don't matter.