What To Do (And Not Do) When The Sharemarket Is Down

Days like today can be difficult for investors who are watching months of capital gains disappear in a sea of red. So, here’s a tip. Stop looking at your portfolio.

Instead, Look At Your Watchlist

A very large part of investing comes down to psychology. It’s one thing to understand valuations and the benefits of investing for the long-term, but it’s a whole other thing to put that knowledge into practice.

One of the most dangerous things to do on a day like today, where the ASX 200 index (INDEXASX: XJO) is currently down more than 2%, is to start looking at your portfolio. My portfolio is down today, I already know this. So, why would I check? Unless you’ve invested solely in gold shares, your portfolio is likely to be down too.

However, if you’ve invested in high-quality businesses, then chances are you won’t need to worry about today’s share price movements. The underlying fundamentals of the business you’ve invested in are likely to remain the same.

This is why, instead of looking at my portfolio today, I’ve been looking at my watchlist. Today’s the day to be watching, maybe even buying, those high-quality businesses you’ve had on your eye on for quite some time.

Perhaps businesses like Pushpay Holdings Ltd (ASX: PPH), Altium Ltd (ASX: ALU), Nearmap Ltd (ASX: NEA), and Xero Limited (ASX: XRO). This is a perfect opportunity to be looking at high-growth businesses with competitive advantages, trading at lower prices than they were yesterday.

The Bottom Line

Consider asking yourself this: have the underlying fundamentals of my businesses changed? Have its growth prospects changed? If you’ve invested in great businesses to start with, the answer will likely be no.

So, stop worrying about the short-term movements of your portfolio, and instead focus on the shares on your radar that are now trading at more attractive prices.

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Legal disclaimer: Chances are, the information you read on the Best ETFs website may contain a mix of factual information and general financial advice. Any information/advice on this website is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information and NEVER INVEST IN AN ETF OR MANAGED FUND BEFORE READING THE PRODUCT DISCLOSURE STATEMENT (PDS). If you don't read the PDS you're practically flying blind with one arm tied behind your back. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).

Disclosure: At the time of writing, Max has no financial interest in any of the companies mentioned.

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