The market is crashing – but should you?

Over the weekend many of you may have heard about a market crash. We’re here to set your mind at ease.  

"You are asking how a watch works, when you should just mind the time." 

In the movie Sicario, the character played by Benicio Del Toro utters these words – many of you over the coming days may look at your investments and superannuation balances and ask the question what do these tariff wars mean?  

What we are really asking is will I be able to retire, or draw that passive income in 5, 10, 20 years? 

Temporary declines will happen! 

• A decline of 10% or more will typically happen once per year (56 in total have occurred between 1946 – 2017). 
• A decline of 15% or more will typically happen once every three years (22 in total have occurred between 1946 – 2017). 
• A decline of 20% or more will typically happen once every five-and-one-half years (14 in total have occurred between 1946 – 2022).  

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Each one of the declines mentioned above (92 in total) have corrected themselves, recovered, and managed to grow to a new high, hence the use of the word “temporary” when talking about these declines.  

Timing the market is futile 

​Some of you may be considering a more, let-me-go-into-cash-and-wait-to-see-if-there-are-more-declines approach. Surely, I can correctly time when to sell and then buy back in? 

Timing the market is futile: The best and worst trading days often happen close together and occur irrespective of the overall market performance for the year. 

Vanguard calculations, based on data from Refinitiv using the Standard & Poor's 500 Price Index.

“Be Fearful When Others Are Greedy and Greedy When Others Are Fearful.” 

It may be wise to heed the words of famous investor Warren Buffett. The market may be experiencing a one in 3-5 year decline, so would it not be prudent to contribute a bit more into your investment or superannuation over this time? When we see that Myer has a 50% sale, we buy more. Right now, the market is signalling a sale sign - somewhere between 5% or higher. It might be wise to be just a little bit greedy? 

After reading the above many of you will have formed an opinion – I welcome you to ring the office, and we will happily talk through the above. We remain positive in helping our clients achieve their goals.  

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