So, at the time of writing, the ASX is down 3.03% so far today.
That's after a 2.1% fall on Friday.
Yep, we're down 5% in two trading days.
Cue the sub-editors' favourite descriptions: 'plunge', 'tumble' and 'roil' are just a cross-section of the words used in our major media outlets today:
"Live: ASX plummets 3pc in worst two-day performance since 2022"
"Recession fears: ASX dives 3pc in $77bn wipeout"
"US recession rumblings to roil ASX"
Which means?
Well, everything and nothing.
Does that sound flippant? Good.
What???
There is no arguing the numbers.
The ASX, as a total, will be worth many billions of dollars less at the close of trade today than it was before the market opened last Friday.
In percentage terms, our portfolios have lost more than $1 in every $20 over that time.
Those losses are very real. But they're unlikely to be consequential, over the long term.
Very unlikely.
How do I know?
Well, because we've been here before.
So, I want you to think differently about the language in those headlines.
First: If it's the worst two-day fall since 2022, that means there was a bigger two-day fall in 2022!
Do you remember that 2022 'plunge'? No? Precisely.
Oh, and even after a 5% fall, the S&P/All Ordinaries Index (ASX: XAO) is still up more than 9% over the past two years, plus dividends, which probably means a two-year return somewhere around 16-18%.
I'd take that.
Next, the $77b wipeout. Two thoughts:
- If you're still adding money to your investment account, the market has just given you a $77 billion discount on Friday's prices, and more than $100 billion from Thursday's. Who complains when the petrol price falls? Who thinks 'Oh man, the juice in my tank is now worth less'?
- If you're not, you're probably getting dividends from some or all of your portfolio. Dividends that won't change one cent just because share prices are lower.
And third… the US recession thing?
It might happen. They happen pretty regularly.
They're not desirable. Or pretty. Or welcome. Or painless.
But they happen.
And despite many, many recessions over the past 120-odd years, the Australian share market has averaged a gain of around 9% per annum over that timeframe.
Don't get me wrong: I'd love my shares to go up, every day, in a straight line, forever.
We all would.
But we don't get that option.
I started investing in 1996 or 1997. I've been doing it professionally since 2011.
I've seen, and invested through, recessions, crashes, geopolitical crises and currency collapses.
They get easier, but they always hurt. No-one likes to see their portfolios fall.
The key? I disconnect my emotions from my actions.
During the dot.com bust? I bought shares.
During the GFC? I bought shares.
During the COVID crash? I bought shares.
Not because it felt good. Not because my portfolio was rising (it was falling!). Not because I'm an automaton that doesn't feel fear, pain or loss.
I did it because I just knew I should.
So I did.
I knew that, over time, the ASX has consistently (if not always at consistent intervals) hit new highs. Over and over again.
And that, if the market is going to hit a new high in future (I reckon that's a very, very, very good bet), price falls mean there's going to be more money made when it does (when something that's going to be worth $2 in future falls from $1 to 90c, the upside is greater!).
Does that make the 5%-plus fall over the last two days feel any better?
No. The numbers in my portfolio tell me that I've lost a lot of money.
But does the knowledge of the last 120-years help me invest anyway. You bet!
See, unless democratic capitalism has hit, and gone past, its peak, there are better days ahead.
And if share prices are lower, but the future brighter, there is a lot of opportunity available for the investor who feels the pain, but presses on, anyway.
Which is precisely what I'm doing.
I've got cash in my Super account that I hadn't got around to investing yet (yes, like plumbers with leaky taps, I spend more time thinking about our members' portfolios than my own!).
Now, that cash isn't there because I was 'waiting for a crash' or because I had predicted a market fall.
It's just there.
I was going to invest it soon anyway (see above!).
So, am I going to hold cash just in case things get worse?
Nope.
They might, of course. Or not.
Far, far more important to me is not whether shares fall another 5% or rise 5% in the next few days… but what they'll be worth in 5, 10 and 20 years' time.
No-one knows for sure, of course, but I'm going to buy shares.
And at some point in 2026, or 2028 or 2031, there'll be a headline:
"Live: ASX plummets 3pc in worst two-day performance since 2024"
My guess?
Shares will be worth a lot more by then. And the 3% fall will feel like it does today.
But we'll be glad we kept investing, anyway.
"Courage is being scared, but doing it anyway" according to one quote.
Investing is the same.
So, keep your chin up and your eyes on the horizon. The spoils go to the consistent and the patient.
Fool on!
