The Australian share market or S&P/ASX 200 (INDEXASX: XJO) has officially crashed.
Australians have panicked sold just about everything they can, and that’s a major shame for our economy, for their hip pockets and the inevitable recovery of our economy.
Everything from Afterpay Ltd (ASX: APT), which was down 75% from its peak yesterday but today is back up 31%, to Pushpay (ASX: PPH) and other companies that are benefitting from the downturn in the short term and have held up very well.
It seems like the world is ending for investors.
Some long-run optimism
As an extremely long-term investor (10+ years) who doubles as an optimist, I never get caught up in the short-term movements of markets and share prices. Never.
I value companies from the bottom-up using business fundamentals. That’s why I haven’t sold a share in months and I won’t sell based on share prices.
My businesses are rock solid and going to survive this rout. And if they don’t? Well, that would mean we have far bigger things to worry about than an investment portfolio.
Fortunately, I don’t think we’re heading for a “coronapocalypse” as many headline writers suggest.
That said, I am a realist. So please read my bold predictions below very carefully. Don’t misinterpret my words: this is a real market crash, and it’s going to hurt in many ways.
Meaning, even if my predictions skew heavily towards optimism, I’m not being “fluffy” at the expense of the suffering that’s going on around the world, financially or otherwise.
6 ‘bold’ predictions for the COVID-19 share market crash
- In one month from today, Australia will have spent 2 weeks in lockdown. This is the only way we’ll contain — and then mitigate — the disease.
- In one month from today, Australia will have shipments of testing kits that produce COVID-19 test results in less than 60 minutes. “Owen, I don’t believe you.“
- In one month from today, the stock market will have stopped crashing. There will be pockets of severe volatility in stocks and credit markets, but I believe it will be isolated to lower-quality companies, second-order affected businesses (e.g. credit-dependent companies) and those caught out by movements in credit-affected markets (bank stocks, infrastructure, etc.).
- In one month from today, 99% of China and South Korea will be back at work. This is already happening.
- In one month from today, Australia’s total confirmed cases of COVID-19 will have skyrocketed from today but new cases will be falling, fast. Regrettably, the tragedies (i.e. deaths) will not be over.
- Our friends, families and fellow humans in developing nations will need Australia’s help to challenge the virus (financially & medically). China and others will be required to keep supporting countries that cannot support themselves.
These predictions are based on my belief that the world is united in fighting this problem together and we will do it, but they are probably my best-case scenarios right now. My predictions are not based on my expert medical knowledge of pandemics, complex mathematics or any mystical insights.
However, I encourage you to take a look at this page and study confirmed new cases from countries that have been devastated by this virus. Are the numbers getting better or worse?
The world — politicians, businesses, individuals — know what’s required to stop this terrible problem in its tracks. And we now have multiple examples of how its works (and counterpoints), and how long it takes — if country leaders do what’s required.
As a human, I’ll continue to be devastated by the tragedies to come.
As an investor, I believe things will get better from here. Not overnight, but with time.
And the further out investors look, the better the outlook for asset prices becomes.
That’s why I’m looking for places to slowly deploy my money conservatively, but confidently, over the next 6 – 12 months.
I’m starting with companies like the 3 stocks I identified in the free investment report below.
2020: 3 stocks to buy for the long run
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At the time of publishing, Owen owns shares of Pushpay.