The Australian stock market has swung wildly in the past two weeks.
But this morning, Aussie investors switched back to sell mode. With share prices down up to 20 per cent from their peak, the question is whether now is a good time to buy into the stock market.
Monday 9 March: $155bn wiped from Australian share market in worst day since GFC
Tuesday 10 March: It's now a CRASH: $235 billion lost in 24 hours
Experts are divided, with some saying now is the right time while others advise investors to ‘sit tight’.
Here’s what eight investment experts said:
‘Good value’: Shane Oliver, AMP Capital chief economist
With the market down 20 per cent from its high, shares are now very cheap particularly versus bonds where yields have collapsed.
I think they are good value and will be much higher 12 months ahead. But they could still fall further in the short term given coronavirus uncertainties with daily new cases still rising.
Given the impossibility of timing the low I would say the best approach is to average buying into the market over the next few months.
‘Stick to your guns’: Jessica Amir, Bell Direct market analyst
Investors need to remember that if they sell down now, and lock in a lower price, not only could they be crystallising a loss, but they could miss out of the bounce back/recovery.
Investors need to stick to their knitting and investment principals or seek advice. If they don’t want to do that, then get cracking and develop some key investment filters.
Amir’s tips on buying stocks:
Look for quality companies or positions that can ride out the wave. Do your due diligence and work out what price you want to buy in at. Think about what is reasonable. Look at what the research says through the broker you trade with.
Start getting ready to average-buy into those stocks or ETFs over a period of time, instead of trying to pick the bottom.
Remember: as investors we are rarely given opportunities like these to buy strong companies at massive discounts. So it could be the opportunity to buy those companies you love. Doing so, could have a HUGE impact on your investment nest egg over the next 5-10 years.
‘Be balanced’: Kerry Craig, JP Morgan Asset Management global market strategist
This is the wrong question to ask. Investors should ask themselves “am I balanced?”.
A balanced allocation is crucial in times of stress when most investors have a longer term horizon and investment goals. What ‘balanced’ is will depend on the investors’ age, goals and risk tolerance.
So rather than thinking ‘is now the time to buy’, it’s better to take a holistic view of investing and ensuring a balanced and calm view to a market that is behaving anything but.
‘A good time to buy’: Stephen Koukoulas, independent economist
While it is hard to call when the bottom will be reached, it is a good time to buy.
The fundamentals have changed as the world economy and the business sector is impacted by the coronavirus, there appears to be a global policy response infolding in reaction to this fallout. Central banks are slashing interest rates, governments are ramping up fiscal stimulus and when the coronavirus eventually fades, economies and market will recover.
To be sure, there could be some extreme volatility ahead, but it is better to be buying shares when the index is around 5,750 points than when it was above 7,000 points.
‘Once a decade’ opportunities: Julia Lee, Burman Invest chief investment officer
If it was me, I'd sit tight here. We're due for a bounce and if you really wanted to exit, it gives you a chance to exit at a higher price. I look at these melt downs as longer term opportunities... it only tends to happen once a decade and I see it as a time to get set for the next ten years.
An example is bank dividends: historical yields are around 9 per cent at the moment. While there might be short term pain, if dividends and earnings stay or recover to historical levels, where else can you find a 9 per cent yield?
Don't panic and get set... I'm looking to buy stocks in 2-3 months time.
‘Don’t buy the dip’: Eleanor Creagh, Saxo Markets Australian strategist
Stick with overweights in gold, silver and US treasuries relative to equities. Buying the dip is not recommended unless it's gold!
Find the opportunities: Bryan Wilmot, Hellostake global head of marketing
I don't think it's a simple yes or no; it's a question of where you see opportunity.
[Investors] are doing lots of different things. Plenty are trading Inverse or Volatility ETFs… Some are getting into gold which is seeing all-time highs. Others are taking advantage of companies they see will benefit from the Corona-led downturn… Some are opportunistically buying the dips of Apple, Teslas and Amazons while others are going contrarian and buying something like a Carnival Cruises. The opportunity really is endless.
We've seen huge volumes move into the market from Australian investors, including new investors, over the past few weeks while the market has been falling off a cliff. We think that Australian investors see the diversity of opportunity in the US and are moving their money to reap the rewards during this difficult period. It seems they believe it's a good time to get into the market.
Don’t jump ship: John Birkhold, Origin Asset Management partner
It’s easy to forget what can happen when things go bad. Long-term investors need to remember that in turbulent waters, it’s usually best to stay in the boat rather than trying to change strategies. However, investors need to be able to withstand another drop, particularly given that markets typically fall 30-40 per cent during recessions.
On a positive note, this will be transitory and we will eventually come out the other side.
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