The peanut gallery will have a field day bagging the ASX for its market shut down today. But does it matter to investors? Not one bit.
The post What can you do when the ASX is down? appeared first on Motley Fool Australia. –
I’ll let you in on a little secret: more often than I’d like to admit, my scribblings are inspired by conversations with the investing team here at The Motley Fool.
Not that it’s a bad thing, of course, but I just have to acknowledge having far fewer great ideas than I’d like to admit…
This is one such piece.
See, I really hope you haven’t noticed, but the ASX has been frozen for most of the trading day, today.
(Why do I hope you haven’t noticed? We’ll get to that, but suffice it to say, I don’t own shares in the ASX, nor do I benefit from an uninformed market!)
We’re not the sort of investors who avidly watch the market here at The Motley Fool, but we have mentioned the ASX’s woes a couple of times today.
We’ve wondered whether it was related to the website relaunch, recently.
One of the team unkindly suggested the ASX should reconsider the quality and/or quantity of its tech team.
And yet another was happy, given the market was up 1.2% when everything went offline, to just call today a ‘win’ and come back tomorrow!
And then one of our investors, Kevin Gandiya, made an astute observation:
“Time for [an article] from Scott Phillips with the following Buffett quote, ‘I buy on the assumption that they could close the market the next day and not reopen it for five years’.”
My only objection was that I wish I’d thought of it before he did!
Because today really is a great ‘teaching moment’ as the HR gurus call them.
Yes, we’re all used to the market closing on weekends.
And yes, on most public holidays.
But today? When it’s supposed to be open?
What on Earth are we to think? And to do?
Certainly a decent proportion of my social media feeds include varying amounts of criticism, hand-wringing and not just a little ‘what do we do now?’.
And you can bet there’ll be recriminations, both inside the ASX itself and people taking potshots from the sidelines.
It’ll get headlines.
More than one writer will compare it to the US or other markets, and bemoan that we’ll look unprofessional, and like a backwater for not having a working market.
Now, I don’t know what time you’ll read this. For all I know, the ASX will be trading again by then.
But let’s just take stock, shall we?
What do we really lose, if the market isn’t open?
Some brokers lose some money from those of us who would have bought or sold today.
A lot more brokers will lose a lot more money from those who’d otherwise over-trade or day-trade today. Frankly, the ASX’s tech team has done those traders a favour!
But other than that?
BHP Group Ltd (ASX:BHP) is still digging up iron ore today.
Woolworths Group Ltd (ASX: WOW) is still serving millions of us.
Cochlear Limited (ASX: COH) is still manufacturing and supplying hearing implants (and working on the next generation of them).
In other words, business as usual for 99.999% of the economy.
Those companies won’t feel any impact of the ASX’s tech glitch.
And those of us who own shares, who owned them yesterday and still owned them tomorrow?
No impact for us, either.
I have to say, I’d be completely fine with the ASX only opening one day a week.
Even once a fortnight.
If there’s something I want to buy, it’s nice to have the convenience of being able to do it, 5 days a week. But if I had to wait until Wednesday, or Friday… well, that’s fine by me.
It would save many of us from ourselves… and save traders plenty of money, besides.
It won’t happen, of course.
These days, it’s all about immediacy.
I want it all, and I want it now.
(That one’s not Buffett, but you probably know that. I’m not sure what sort of investor Brian May is, but I’d bet he’s a better songwriter and guitarist.)
I’m going to suggest to you that such an approach, though common, is not a great one for investors.
Yes, yes, we’re all used to instant access. We demand our every whim is sated, stat.
And the peanut gallery will have a field day bagging the ASX, and those poor bastards who are, as I write this, sweating up a storm trying to find and fix the problem.
But does it actually matter?
Nope. Not a bit.
In fact, that approach I suggested – where the ASX is only open once a week – is probably a useful mental model for most investors.
Why not limit yourself to checking your portfolio once a week. Ideally after the market closes, say on Friday.
Because, unless you think a company you own is suddenly hugely overvalued, checking the price isn’t very productive.
Unless you want to buy shares in a company, checking the share prices of your watchlist isn’t very productive, either.
If you must, use your broker’s website to set SMS ‘alerts’ if they have them, to let you know if a company goes into your Buy or Sell zone.
Otherwise, just pretend the ASX is down all week.
You’ll almost certainly be a better investor as a result.
(And thanks, Kevin, for the idea!)
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Scott Phillips has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Cochlear Ltd. The Motley Fool Australia owns shares of Woolworths Limited. The Motley Fool Australia has recommended Cochlear Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.