Has the share market already hit the bottom? There’s a chance that it may have.
Since bottoming on Monday the S&P/ASX 200 Index (ASX: XJO) went up on Tuesday, Wednesday and now it’s up 1.8% today at the time of writing.
The decline of the share market has been extraordinary. Since 20 February 2020 it has fallen by 29%, which includes the recovery during this week so far. The GFC’s decline was over a much longer period.
But this hasn’t just been a normal financial crisis. It’s a healthcare crisis and that adds a lot more uncertainty. The GFC didn’t cause most of the country to literally shut down. It didn’t stop people from travelling. This is quite a different problem to deal with.
However, what happens with the infection numbers is different to what happens with the economy & jobs which is different to what the share market does.
Italy is thankfully seeing a levelling off of infection numbers. A lot of Europe has enacted lockdowns to various levels. There may be light at the end of the tunnel for stopping the outbreak.
Back in the GFC, it was March 2009 that saw the bottom of the falls. Various US government support measures helped the share market start to recover, resulting in the decade-long bull market we have witnessed during the 2010s.
So, what’s going to happen next?
The thing is, we don’t know what’s going to happen next. Who’d have thought the ASX 200 would fall over 36% in just over a month? But also, who would have predicted the ASX 200 would recover 10% so quickly?
Will investors think that the GFC-like prices of National Australia Bank Ltd (ASX: NAB), Westpac Banking Corp (ASX: WBC) and Australia and New Zealand Banking Group (ASX: ANZ) have bottomed and are too good to ignore, even if the rest of 2020 is tough on the financials on the banks?
Does the CSL Limited (ASX: CSL) share price look attractive after going lower considering interest rates are now extremely low?
Is APA Group’s (ASX: APA) distribution too good to ignore with the yield pushed higher because of the lower share price?
No-one can know what the share market will do next, you just need to decide if today’s share prices are attractive to buy for the long-term. I think so, I invested a little bit today.
These top ASX shares could be just the investment ideas that will help people grow their income over the long-term.
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But you will have to hurry — history has shown the market could bounce significantly higher before the virus is contained, meaning the cheap prices on offer today might not last for long.
Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of National Australia Bank Limited. 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.