I've been in the sharemarket for a long time and have seen many ups and downs, but this coronavirus panic-selling rout is the worst I've ever seen. In the space of just a week, the ASX 200 has gone from a record closing high of 7,162 last Thursday to a low of 6,427 in today's session.
It's the biggest weekly drop for both Australian and US share markets since October 2008, during the peak of the global financial crisis market chaos. As one economist opined, "Stocks and bonds say we're doomed. Anyone who has a better idea for what lies ahead please let us know because right now the direction ahead for the economy is straight down. If global supply chains start freezing up, due to a lack of materials or credit, or both, no amount of rate-cutting will unlock that. If small to medium enterprises can't get paid for their invoices, or pay theirs, or secure raw materials, or transport goods, the net effect is shuttered businesses and job losses."
Another portfolio manager said that there is likely to be further panic and downside before markets settle down. "As so far this has all been driven by offshore infection rates, further escalations over the weekend may see another leg down next week. We think the market is late reacting to coronavirus which has been spreading across borders for over a week. We haven't yet hit peak panic and there may be another leg down for markets."
I've been more or less fully invested throughout all previous crises, and this one is no exception, which means that this current sharemarket rout has dropped my portfolio by nearly 20% (which doesn't sound much until you convert it into a dollar figure), taking it right back to where it was in March 2019 before three fat dividend pay-outs and a big franking credit tax refund.
Of course, it would've been nice to have had the foresight to lighten up before this sharp drop, and to now sit on a pile of cash to buy back in when the market has bottomed, as it will, but what's done is done and cannot be undone, and it will be a long time before the markets recover to anything like they have been in recent weeks and months.
The best antidote to a panic is to not join in yourself, because that's the other good thing about old age: whether the market drops by another 20%, or stays where it is, or recovers some lost ground, there'll always be enough to see me through my personal time horizon of the next five years, ten years, or even twenty years. I'll drink to that!
P.S. Did I really write 'the other good thing about old age' ? Remind me: what's the other?
