You could be forgiven for thinking that there had been some major ructions in the stockmarket over the past couple of weeks. There's been talk of crashes, collapses and crunches, with well-known Wall Street pundits shouting and screaming (if only for effect). So far at least, though, we haven't even seen the 10% drop that people arbitrarily consider is necessary for a 'correction' and the All Ordinaries Index is still above where it stood in March.
The truth is that fear and panic get people's attention and the media is well aware of it. But it's at times like this that investors need to stand back from the crowd and make a cold assessment of what's going on. No doubt some companies are affected by recent turmoil in global debt markets, but some have, and/or will generate, all the cash they need for their future investing plans and have little to fear from a recession, which might in fact help them take market share from competitors. Yet these companies have been getting cheaper along with everything else and we've been licking our lips.
Only a few stocks have so far drifted into our buying range – Corporate Express, Ten Network and Servcorp (almost) – but we're hopeful of bigger falls and further opportunities.
It's a truism to say that, all things being equal, you'll do better from stocks if you buy them cheaply. But what people forget is that for most of their lives, they're net buyers, or at least holders, of stocks. And the ideal situation is to reach retirement with enough in your pot that you never have to become a net seller. So for most people, for most of their lives, stockmarket falls are good things.
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