The S&P/ASX 200 Index (ASX: XJO) is currently down 6.7% in another painful day for the share market.
The ASX 200 share market is now down around 26% since 21 February 2020. Ouch.
It can be really tricky seeing your wealth, on paper, fall by a quarter. Is the world about to have its own Wuhan-like experience? Are several western nations on their way to Italy's numbers? Time will tell. I can understand why investors are nervous.
Perhaps it will take a while for the coronavirus to stop spreading. Maybe it will cause the global economy to go into a downturn.
But I'm not panicking for a few key reasons:
This will pass, just like the GFC did
The coronavirus is a very unexpected event, a once-in-a-century type thing. From a shares standpoint, these events cause a lot of volatility and falls during the months that things are getting worse. But then shares recover strongly when investors see it isn't getting any worse and that things are changing to getting better.
Some of the best-performing times for shares were in the years immediately after the GFC.
Whether the coronavirus takes three months or a year for to settle, plus the economic effects, it will eventually pass. Your valuation on shares shouldn't just be a three-month or twelve-month outlook – shares will be generating profits for much longer than that.
It's a great buying opportunity
The ASX 200 has already fallen around 25%. During most of the GFC, the worst the share market fell was around 50% – it did fall a little heavier than 50% for a small window.
The Australian and global banking system has a stronger footing than it did then, so banks are in a better position to deal with the problems.
There are various high-quality shares out there like Altium Limited (ASX: ALU) and REA Group Limited (ASX: REA) that have seen their share prices sold off but still have very compelling futures, even if FY20 earnings are hurt.
Travel shares like Webjet Limited (ASX: WEB), Flight Centre Travel Group Ltd (ASX: FLT), Sydney Airport Holdings Pty Ltd (ASX: SYD) and Qantas Airways Limited (ASX: QAN) have been heavily sold off but, for the brave investors, they could be excellent beaten-up opportunities for long-term investors looking out three or more years.
I have been putting cash to work during this period and will keep investing. I'd be investing today if I could, sadly I'll have to wait until tomorrow to try to pick up another bargain.
Government support
The US and Australia have already announced they will provide some initial support for businesses, employees and the wider public.
I'm not expecting governments to bankroll the entire economy, but it shows that the support will be there to soften the blow.
As long as most Americans and Aussies stay employed then a potential recession won't be as bad as it could be.
Foolish takeaway
If you have been waiting a while to put money to work, then now is the perfect time to start. I wouldn't invest all of it in one go, there could be further falls. But the best time to buy is when investors are fearful, which is exactly what's happening now and will likely continue for the coming weeks.
