ASX 200: Australian sharemarket tumbles — but it’s not all bad news for investors
Australians should not be panicking with today’s dramatic $75bn fall to the sharemarket. Instead, they could use it as an investment opportunity. HERE’S HOW TO MAKE MONEY
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Australians should not be panicking with today’s dramatic fall to the sharemarket and instead could use it as an opportune time to snap up stocks.
AMP Capital chief economist Dr Shane Oliver warned investors not to forget, “the sharemarket is still up 15 per cent year to date”.
“It’s often the case that the sharemarket goes up by the staircase but down by the elevator,” he said.
“For investors who still have a long way to go until they retire sharemarket falls can actually be good news because it means when money comes into your super it’s buying shares at lower prices, historically for investors the sharemarket will deliver.”
Dr Oliver said investors could use it as an opportune time to purchase stocks.
“Buying shares on a day when the sharemarket is down is better than buying them when they are up,” he said.
“We should be buying things when they are cheap, I buy things from Woolworths and Harvey Norman when the are on sale and when they are not on sale I don’t buy them.
“But when it comes to the sharemarket everyone is happy to buy when it’s up and through the roof, but no-one is happy to buy when it’s down.”
The benchmark share index, the ASX 200, plummeted 2.3 per cent today and removed $75 billion from the value today, falling to 6,485.5 points.
It comes after Wall St fell overnight as rumblings continued around global economic growth and ongoing trade tensions.
InvestSMART’s Evan Lucas also warned Australians to keep calm.
“Should we panicking, absolutely not,” he said.
“There has been quite a run up in the value of the ASX 200 in 2019 so we have been one of the best-performing markets in the developed world.
“On total returns basis we are right up in the top three with the S & P and also the NASDAQ and it’s overtaken the Dow on the total returns basis from January 1 to now.”
He said falls in the market were “healthy”.
“Since 1900 the US has experienced falls at least once a year and it hasn’t experienced one since 2019,” Mr Lucas said.
“We are due for something like this.”
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The nation’s big four banks, ANZ, CBA, NAB and Westpac were among the hardest hit — NAB plummeted the most by a touch over three per cent this morning.
And the Australian economy also took another turn this week — on Tuesday the Reserve Bank of Australia governor Philip Lowe slashed the cash rate to a record low of 0.75 per cent.
Dr Oliver said for investors “it’s a noisy environment”.
“RBA cut the cash rate to a record low, house prices took off in Sydney and Melbourne again, petrol prices were going crazy in Sydney,” he said.
“And now we have the sharemarket bouncing around and then we have Brexit and trade wars, it makes it hard for investors to stay focused”.
Eerily, Mr Lucas said it’s “almost 12 months to the day that we saw an enormous run on in the states”.
“From October 5 to Christmas Eve the US markets lost almost 21 per cent and then it rallied unbelievably from Boxing Day to all the way through to where we are now,” he said.
And not forgetting the ASX 200 jumped to its highest-ever level back in late July, reaching 6875.5 points.