The ASX is having a really bad time right now in a leap year.
The coronavirus caused the ASX 200 (INDEXASX: XJO) to fall 10% last week and it's down another 2.8% this morning. Investors are headed for the exit day after day.
Share markets will occasionally go through declines, some of them heavy. But before the coronavirus, the market had hit all-time highs despite all of them issues before. The GFC was 12 years ago and at some point this will be a fading memory, hopefully sooner rather than later.
I was recently thinking that leap years seem to be particularly dramatic compared to other years. 2000 saw the tech share bubble burst. The market was completed crunched during 2008 when the GFC hit. In 2016 both Brexit and Trump's win surprised the market. There wasn't anything particularly big in 2012, though some people thought the world was ending with that Mayan calendar (which wasn't predicting the end of the world).
It's not productive to try to guess when the market will fall significantly. The GFC was (hopefully) a once-in-a-century event, the previous one was 80 years before that. That type of thinking could see you sit in cash and miss out lots of growth and dividends.
One of the main things that happens every four years is the US election, which happens to be held on leap years. So maybe it's coincidence. Investors do get nervous if they think economic conditions may change. Just look at what happened with the ASX due to the last Australian federal election.
Should you invest in leap years?
Yes. I think we should be investing every year. There's nothing to say that the share market should dip every four years.
History tells us that there's a recession (including smaller ones) every ten or so years. But that's just an average, there isn't some 'rule' that says there has to be a recession ten years after the last one. It could be eight years or fourteen years.
I plan to add money to my portfolio every single year for decades to come to benefit from compounding and time.
