Nimble everyday investors ‘bought the dip’ and made money … now what?

Advisers say don’t change your investment settings, but this does not mean bargain-hunting won’t pay handsomely — and this week it’s been very profitable.

Mining giant BHP led a broad rebound rally on the ASX. Picture: Brett Hartwig

Plucky ‘‘mum and dad’’ investors have won round one in the turmoil engulfing sharemarkets after a powerful rebound on the ASX.

Sharemarket trading data through the week has shown that small investors were bargain-hunting while big institutional funds were selling.

Active individual investors have been building cash for months – while super funds have not done so.

The ASX’s 4.5 per cent lift on Thursday followed an epic rise of 10 per cent on Wall Street as Trump softened his stance on ­tariffs.

Those soaring share prices meant the ASX had its best single session since 2020. It’s what seasoned investors describe as ‘a relief rally’.

Internal figures from share broker Bell Direct suggest local investors were buying blue chips and index funds every day this week. Among the most popular names were BHP, Macquarie Bank, CSL and ANZ, along with exchange-traded funds covering the Australian sharemarket such as VAS Vanguard Australian shares ETF and the IShares S&P 500 (IVV).

But the tariff war is far from over. Key signals of instability such as the VIX ‘‘fear index” remain at elevated levels.

In other words this market could seesaw for weeks, if not for the entirety of the Trump administration.

What to do next?

Despite wild trading on the markets, most financial advisers are telling investors not to change their super settings (which generally range between conservative, balanced and growth).

Rather financial planners suggest investors should stick with the level of investment risk they feel is most appropriate for their investment disposition – and age bracket.

But sticking with overall plans for the long term will not stop bargain hunters moving again if the opportunity reappears – and with Trump’s tendency for high-stakes gambles, that may not take long.

As Bell Direct market analyst Grady Wulff suggests: “Now it is time for investors to make updates to their portfolio … keep calm and buy the dips.’’

Early bargain hunters are betting that the tariff downturn – sharemarkets are still lower than they were when Trump was elected – will be a repeat of the V-shaped Covid market crash. This would be in contrast to the grim 50 per cent drop in the sharemarket after the GFC when the ASX took a decade to recover.

In 2020 shares fell 30 per cent but had fully recovered within 14 months.

This time around investors have very mixed signals on how shares will fare in the short term.

The chance of a US recession – the biggest fear in the market – was cut from 65 per cent to 45 per cent by powerful investment bank Goldman Sachs after Trump’s tariff pause.

On the other hand, bears will be deeply concerned that US bond markets showed signs of panic mid-week when bond prices fell at the same time as shares – a move that could signal extreme difficulties ahead.

Either way, investment experts such as Dr Sam Wylie of the Windlestone Education group believe investors must stay the course. He told The Money Puzzle podcast: ‘‘Investors should be in the market for the long term – they should be invested and stay invested and try not to time the market.”

Wylie also said Australian Investors had clear advantages from franking credits in local stocks. But he remains convinced in the long-term attraction of US sharemarkets: “The biggest mistake in the 20th century was to be underweight US shares, and I think that’s likely to be the biggest mistake in the 21st century because it’s gonna be about tech and US tech dominance is accelerating and getting deeper.”