The last week or so has seen the Australian share market drop to a 6 month low, with the ASX200 finishing at 5,837.1 points on Monday. And while this may be a worrying sign for some, for others this dip in prices also presents a better buying opportunity than what was on offer just a few weeks ago.
In a nutshell, our financial sector continues to struggle due to a concoction of international factors: US stocks falling heavily, the US Federal Reserve hiking interest rates and trade tensions between the Trump administration and China escalates. Right now Australia is basically at the mercy of what is happening overseas, but our own Royal Commission isn't helping our banking shares either.
On the upside, energy stocks, have closed higher supported by oil prices due to supply concerns. This is due to international pressure on Saudi Arabia over the disappearance of a prominent Saudi journalist has stoked worries about geopolitical tensions. Telecommunication stocks also rallied late on Monday to join the energy shares as the only sectors in positive territory.
The US benchmark S&P 500 had snapped a six-day losing streak on Friday, while the Nasdaq and Dow also finished the session higher, but analysts have warned that until the US and China reach a trade deal, the rebound in the stockmarket could be vulnerable, with investors anxious about the impact of tariffs on corporate profits.
So what is to be made of all of this?
History and time tell us that we've just passed the ten year anniversary of the Lehmann Brothers collapse – a pivotal moment during the GFC downturn. At that time no one really knew if it was the beginning of the end, an ongoing crisis or not far from a recovery. History shows the market bottom took another six months and if investors could stand the uncertainty, they also got the recovery. The majority of what people know of investing is arrived at through media reports, where the market has $50 billion 'wiped' in a day. Where people are ripped off left, right and centre. Those are the ongoing disaster stories. The balance? The success stories the media focus on Are usually get rich quick schemes or strategies built on sand.
For those who want the best long-term investment journey available, an important element is having emotional resilience and a knowledge base that aligns with an evidence-based investment philosophy. We believe this is the most important component that gives someone a better chance of success. So, with the market moving around, hang in there and look for buying opportunities with excess cash.