Well, it’s officially been one year since the bottom of the coronavirus-induced market crash that defined investing in 2020. This time last year, the markets were in freefall over fears of a global economic wipeout. It was a day of panic, to say the least. We saw shares drop to unthinkable lows. Of course, that was before the US Federal Reserve came to the rescue and promised ‘whatever it took’ to get the financial markets moving again. That came in the form of massive, unprecedented quantitative easing (QE) programs which, surprise surprise, worked to allay investors’ fears. The S&P/ASX 200 Index (ASX: XJO) is today (at the time of writing) up 48.97% over the past 12 months.
So in the 12 months since, what have we learned? That a market crash is usually never the time to sell an ASX share, that’s what.
Lessons from an ASX 200 crash
This morning, we looked at some of the best performing ASX shares over the past year. All of them found dramatically low bottoms on 23 March 2020. And all of them have recovered and gone on to reach new all-time highs.
Fear is a powerful and insidious emotion we investors have to constantly battle. At no time was this more evident than it was a year ago. I’m sure there are still investors out there who sold everything in mid-March 2020 and are still waiting for the second dip to come along so they can rectify their mistake.
But selling your shares just because others are panic selling almost never works out well. When you buy a slice of a business, you should be buying for the long-term. Part of every investment decision should be assessing your company’s ability to weather a black swan event. Now no one could have foreseen a global pandemic – a bonafide black swan if there ever was one. But the best companies fix their roofs when the sun is shining. That was evident in March of last year.
The bottom line is that most investors who sold out of their shares in March had a terrible 2020. Most of those who held on, or as Warren Buffett would say, were greedy when others were fearful, did magnificently.
At the end of the day, the ASX share market has been through a lot. Two world wars, the great depression, a couple of other wars, the dot-com crash, the global financial crisis, and now a global pandemic. It has always pulled through and gone on to make new all-time highs. And ASX shares go up far more than they go down. This lesson isn’t new, but on this anniversary, it is worth keeping in mind.
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of February 15th 2021
More reading
- ASX 200 crash anniversary: 5 of the best performing shares of the last 12 months
- 5 things to watch on the ASX 200 on Tuesday
- ASX 200 climbs, Crown soars, Mineral Resources drops
- Top broker issues buy alert on Santos (ASX:STO) and these ASX energy shares
- ASX 200 up 0.35%: Crowns surges, ANZ & CBA settle class actions
Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
The post ASX 200 crash anniversary: The most important lesson we’ve learned appeared first on The Motley Fool Australia.
from The Motley Fool Australia https://ift.tt/3rcx4W3
Leave a Reply