The S&P/ASX 200 Index (ASX: XJO) is now unequivocally in full-on 'stock market crash' territory. Since mid-February, the ASX 200 has lost around 37% of its value. It's getting pretty nasty out there, to say the least!
Now, periods like the one we're currently in tend to bring out the worst in ASX investors.
Sure, you might have taken investing advice from Warren Buffett and others on board while shares were going up last year. You might have decided that you too were going to be a long-term investor – one who's ready to 'be greedy when others are fearful' and 'buy when there's blood on the streets'.
But when it comes to the throes of an actual stock market crash, things are often different in reality.
Emotions take over. Logic is put to one side.
You just get so sick of opening your portfolio every day just to check how much money you've lost.
It's exhausting (and I'm talking from first-hand experience here).
For many people, this daily grind becomes too much. Eventually, capitulation – you find yourself saying that 'I'll just sell now and stop the bleeding' and 'buy back in when things turn around'.
The only problem is that's an emotional decision – and one likely to lead to significant wealth destruction. And what's worse? It might feel like the 'right thing to do' at the time.
Selling in a crash is never the right thing to do by your portfolio. If you had a crazy neighbour who stuck their head over the fence every morning for the last month and offered you 5% less each day for your house than what you paid for, would you give in today? Or tomorrow?
That's what's happening with most ASX shares right now.
There's another way to invest during this crash
I understand that it's a very difficult time for the country right now. Many people are losing work and jobs, and money is suddenly likely to be very tight across many families in Australia. Therefore, it's very likely that many investors have less cash lying around for investing than normal.
I do think it's a great time to buy your favourite ASX shares right now. But if this isn't possible, not doing anything at all is your second-best option today! History shows in every stock market crash in history, new record highs are made in subsequent years. But you risk missing out on any post-crash gains if you've already sold out. Doing nothing might just be the best thing you can do right now (apart from buying of course).
