Shares spiral means buy
FRIDAY, OCTOBER 4, 2019 themercury.com.au SUBSCRIPTIONS 1300 696 397 AUSTRALIANS should not be panicking with yesterday’s dramatic fall to the sharemarket and instead could use it as a 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 and removed $75 billion from the value, falling to 6,485.5 points.
It comes after Wall St fell overnight as rumblings continued about global growth and ongoing trade tensions.
InvestSMART’s Evan Lucas warned Aussies 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 and year and it hasn’t experienced one since 2019,” Mr Lucas said. “We are due for something like this.”
The nation’s big four banks, were among the hardest hit — NAB plummeted the most by a touch over 3 per cent.
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.