The start of the year has been exciting for the market, with the ASX 200 down 460 points from the high 5320 to low of 4860 this is a fall of 8.6%.
Although this sounds bad, if we look back over the past six months the market has been at these lows 4 times.
So what do you do when the market is like this? Do you buy, sell or sit and wait?
The key is to go back to your investments strategy and then review all of the companies individually. You need to work out how the news coming through will affect each company and what is the best course of action.
The key issues are, fall in commodity prices, low oil price, China market falling and the US increasing interest rates.
When broken down each issue, is not that big a deal but having them all at once has caused considerable panic in the market. Add to this the increasing unemployment issue in Australia and we are seeing the tail end of the GFC.
The next and last phase will be housing prices falling on the back of personal bankruptcy.
Investors, however, should take advantage and buy on weakness.