The bear market continues.
The ASX is starting yet another day in the red today, with the S&P/ASX 200 Index (ASX: XJO) opening 2.63% lower and sitting at 5,575.1 points at the time of writing. This follows a brutal session last night over in the US markets. The Dow Jones Industrial Average fell a staggering 5.86% overnight to 23,553 points, so a positive start to the ASX this morning was always going to be a tough ask.
The Dow has now lost 20.3% since its peak on February 12 – officially putting it into 'bear market' territory, which ends the 11-year bull run the US has been on since the GFC.
It was the longest bull run the US stock markets have ever known but is now just another reminder that nothing lasts forever.
Back home on the ASX, things don't look too much brighter. The ASX 200 has now lost 22.19% since its own record high back on February 20 – putting our market firmly in 'bear market' territory as well.
Some of the ASX's largest holdings have collapsed (no other word for it). The ASX 'big four' banks are at GFC-era lows, with Commonwealth Bank of Australia (ASX: CBA) being something of an exception.
Other ASX blue-chip shares like Woolworths Group Ltd (ASX: WOW), Wesfarmers Ltd (ASX: WES) and Telstra Corporation Ltd (ASX: TLS) are well off their 52-week highs as well.
Even perennial grower CSL Limited (ASX: CSL) has had a 15% haircut over the last month (and CSL is a healthcare company!).
How to invest in a bear market
This is no doubt a scary time for anyone with savings and capital invested in ASX shares. It's always pretty horrible to see thousands of dollars (and months or years of gains) wiped off your net worth. You might have regrets about not having enough cash, not selling your stocks last month or being invested at all.
But bear markets are a natural and unavoidable part of the investing cycle. And it will pass! If the stock market can survive two World Wars, the Spanish Flu and SARS outbreaks and 9/11, I think it will survive this coronavirus.
No one (even Warren Buffett) is a perfect investor. You are never going to get the timing perfect, pick exactly the right companies or know when things like the coronavirus will happen.
So stick to your guns, don't sell shares because someone is offering you an absurdly low price, and buy companies you think are on sale right now. When (and not if) the ASX digs itself out of this hole, you'll be glad you did!
