How Low Can ASX 200 Go?

A big drop in today's share market, how low can it go?

Current ASX 200 price

Lowest so far: 4546 on 23 Mar 2020.

Poll Options

  • 5
    5888 (today's lowest point so far)
  • 8
    5601 to 5888
  • 21
    5401 to 5600
  • 6
    5201 to 5400
  • 14
    5000 to 5200
  • 359
    4801 to 5000
  • 6
    4601 to 4800
  • 13
    4401 to 4600
  • 7
    4201 to 4400
  • 9
    4001 to 4200
  • 111
    Below 4000
  • 5
    Below 3000
  • 13
    Below 2000

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Comments

  • +9

    The way the market is reacting will almost definitely see it below 5000. Sucks for us in the market already but great for those with some cash willing to pick up some bargains

    • +2

      This is precisely the reason why Warren Buffet has been reserving his cash in the last year or so rather than invest it. The 1% probably have a fair idea what's coming.

      • +6

        So Buffet saw COVID-19 coming - wow he has many talents

        • +24

          No, we were overdue for a downturn regardless of Corona.

          • +1

            @Jules_d1: So that's why they're building a wall between Mexico!!

        • +1

          Buffet must of read The 'Eyes of Darkness' novel by the author that predicted the coronavirus back in 1981.

        • If it wasn't the Virus it would have been something else. Most people buying because "it was going up"

        • +3

          Buffet invested in the bio-companies producing these virus's like Gates.

        • +1

          There has been a virus outbreak once every 7 years which puts it around 25% chance of an outbreak each year.

          You don't need to be Warren to understand the risks.

    • +1

      What would be a good sized, relatively small but significant amount for a first time punter to invest (long term) on the ASX?

      • +24

        A small loan of $1m or so from your parents should do the trick.

        • Pocket change

        • +5

          Parents won't have any money. Lost it on the ASX

        • Inheritance ?

      • +7

        About three fifty.

        • +6

          For jousting sticks?

          Tell'em he's dreamin!

        • +4

          Well it was about this time I noticed that this stock broker was about 8 stories tall and was a crustacean from the protozoic era!

      • This is predicated on how much you earn and how much you have in savings. Everyone is different.

      • I sold my car in 1987. Lost the lot. You are talking like it is a casino. Throw it into your super or invest through an ETF if you must. The less control over it your have the better so you don’t make bad decisions based on panic and misinformation. The share market is not for beginners and not for fun. Minimum investment time should be at least 7 years and never invest money you could use better elsewhere. Also commercial property investments are less risky than shares and over time produce about the same result. So a property etf would be a more comforting move long term.

      • $50k I'd say.

    • +1

      If you think it'll get lower, why not cash out now and then buy again when it bottoms out, you'll end up with more ASX in the end.

      • Agree, going down is fast, the recovery is slower, don't try to get it on the lowest, you risk to lose some more.

      • Fools strategy. It is not a casino and if you treat it like one the same thing usually happens to you - the house wins. If you make a profit once you will get hungry and want to do it again and again and again. Eventually you will lose. The saying catching a falling dagger applies here. Google it.

  • +6

    5881 now, 5.7%

    Bring it on! Sooner we hit bottom )not for a while yet) the sooner I can top up on my good stocks. :)

    And by the time I retire in 15 years or so things should be back on track….

    • million dollar question

      where is the bottom

      don't want to catch a falling knife

      • +22

        You don't have to get the exact bottom to get good gains. If it falls far enough, there will be a fair bit of leeway.

      • +9

        No need to catch it. Average out your buys as it becomes good value, doesn't matter if it goes further as you buy more or simply hold. As long as you are not in for short term the falling knife idiom doesn't apply to good shares

        • +1

          How do u determine if its a good value to buy Or not?

          • +2

            @OzFrugie: 4 banks. If in trouble govt. Helps, affects too many ppl to bust. High dividends.

          • +1

            @OzFrugie: Same as you always have. Research and look at the numbers. Corona just adds an extra risk which means you need to pay more attention to debt levels and their ability to sustain a short to medium business downturn.

      • +1

        where is the bottom

        Ask Alan Jones

      • 3500 approx

    • I have hink the majority of solid stocks will rebound to close to what they were a lot closer than that. Fundamentally they are still the same company they were 3 weeks ago.

      • Fundamentals will not make a business survive.

        If you were to lose the executives (likely old) to COVID19 that company has changed! Same can be said for their workforce, limited skills in all sorts of industries that are critical to growth.

        If it has significant debts and can't operate, it will default unless the gov bail them out. Not going to happen to every company.

    • Gee you must be a financial genius. Like nobody ever thought like that before, except maybe the people suffering the most pain and stress right now. Go to the casino instead and lose your money.

  • Someone please explain how this will affect house prices?

    • +6

      A bunch of people have leveraged assets in the market. The market drops to the point where those people now get margin calls from their brokers requiring they come up with a wad of money fast. Rush to sell house to pay broker. (Granted there wouldn't be too many in that position. :)

      Here's a read for you.

      https://finance.zacks.com/stock-market-affect-housing-market…

    • +3

      Say you had shares valued at $1M yesterday and now it's valued at $800k today. If you wanted to buy a new house today and needed a deposit, what's your purchasing power going to be like? Ceteris parabus.
      You're not going to be the only one in this situation, and yes, lower purchasing power means lower sale price in an auction.The housing marketing thus have just gone down as a result.

      • You’re assuming everybody is stupid. Lower interest rates make paying the mortgage easier so people can wait it out. Owning a house is not a lotto ticket.

        • I think bank's keep the benchmark rate high, in purpose to avoid bubble. This means people can't borrow more with rate cut, maybe a little bit more, but not a lot more.

    • +2

      I've been a housing skeptic for many years but it hasn't served me well.

      While both the above points are correct. I don't believe they apply to many buyers.

      In 2008, house prices did move lower in both Sydney and Melbourne but not much. Something similar could happen this year.

      What would knock them lower is if mortgagees lose their jobs and are foreclosed on. That's far from a certainty at this point. The travel industry has been affected but the effects need to be much wider.

      If foreclosures don't spike then all that's left is if the prices offered lessen - given it's unlikely interest rates will rise or nominal pay will fall - this could happen due to job losses, tightening credit or (in a bit of a wild scenario) coronavirus impeding auctions.

      A better question is how the housing market hits the 20% price increase Christopher Joye promised: https://www.afr.com/wealth/personal-finance/house-prices-to-…

      This will be challenging given GDP growth is predicted to be marginal this year and the RBA only has one rate cut left. The RBA can then buy back bonds or shares (the latter very unlikely but China did it) to inject more into the economy but that money then has to make its way to housing. If that doesn't happen, the government could boost house prices by improving incentives (something you should be worried about).

      Overall you could see a modest fall (less than 10%) in house prices this year. More is possible but I'm just not feeling it to be likely. A safer bet is to get on Twitter and remind @cjoye - who has just tweeted about the stock market - about his 20% lift prediction. Somehow I don't think we'll see that happen in the next two years - even after the coronavirus/oil price shock abates.

      • +1

        Is this a very optimistic view? Do you work in real estate m8?

        • +5

          Nah. And I'd be absolutely delighted to see a big price decline. I've been waiting literally decades for it - and always disappointed.

          If you think my view is optimistic though check out that Christopher Joye guy. If we see anything greater than a 5% decline - someone should write a letter to the Australian Financial Review pointing out just how far off they were.

          The problem is there's a whole cohort of columnists in the media landscape - Bolt, Henderson, Devine and Joye - who have no discernible talent and contribute absolutely nothing.

        • Just to put this all it in perspective 25 days after the Australian Financial Review published an article suggesting a 20% increase in house prices. I predict a 5% decline and I get called the optimist?

          That's a 30 percentage point gap! If I predicted four times that gap I'd be predicting houses would be literally worthless in the near future…but it's a good indicator that rational thinking has left the market. This coronavirus won't kill us all. I guarantee it.

          • @markathome: Why would it make you delighted?

            A hell of a lot has changed in 25 days.
            Your gap is 25%, I guess.
            Rational thinking has left the market two year ago+.

            Reputation? Writing a letter to AFR?
            AFR is part of the Nine Entertainment Co and majority investments in the Domain Group, fact.

            • +7

              @Hasbulla:

              Why would it make you delighted?

              I own no real property and most of my money is in savings accounts. I pay a small fortune in rent. I think about housing every day.

              I realise - particularly as I'm not a full-time employee - I'll most likely lose my job in a recession. But I'd use that to move back to Perth and buy property there. I think I'd like having a house - more-so than a job.

              Reputation? Writing a letter to AFR?

              I was just thinking one of those letters to the editor. Do they publish those in the AFR? Christopher Joye has been dangerously optimistic on housing for such a long time. The reality is housing in the Australian economy is squeezing real people - we're all worse off for that.

              $1 million is not a small chunk of change. It should not be what it costs to buy the median property in any of Australia's housing markets.

              • +1

                @markathome: Totally hear where you coming from m8.
                In a very similar boat to yours.
                Including not making sense of the current value of house pricing, doubling from 2013 to 2017.

              • +2

                @markathome: Interesting views, mate

                I'm in the same boat (renting), and would like to have no more but just a house for myself. This may or may not happen anytime soon - as the prices can go up practically indefinitely, depending how desperate the government will be to keep them up.

                This is simple as that - they can cut the rates, if insufficient, print money and intervene on the markets like Bank of Japan or Swiss National Bank, pushing valuations sky high. No fundaments, no technical, no other reasons to stop this.

      • +1

        Average rental gross yields on Sydney houses now about 2.7%:-

        https://sqmresearch.com.au/property-rental-yield.php?region=…

        Look at the trend. Once you pay letting fees, insurance, rates and utilities, you are making essentially no return. Its not even wiping its ar*e with cash, let alone shares. This is assuming that you don't have a mortgage over the thing. If its leveraged, its just a money hole, pure and simple. At least until you find an even bigger mug who will pay even more for the thing.

        I realise that houses have always traded at a premium relative to shares. There are valid reasons for that, houses appeal to a certain category of investor who is good with his hands and couldn't be arsed figuring out what "EBITDA" means. Houses are tangible and transparent and less volatile, traditionally.

        Even with the fall, most equities are still not priced for recession, let alone houses. But jesus, when it actually does come, Lord help us. 2008 was the recession we needed to have, but we didn't get it.

        • its just a money hole, pure and simple.

          negative gearing with capital gains as end game

    • +2

      Finance for Dummy explanation would be, corona kill ppl, so we need less houses = lower house prices.
      And don't stock up toilet paper, same applies.

      • Upon reflection sometimes I need to not hit send. My previous post is quoted for posterity.

        The survivors might want to keep further apart from one another tho?!? = less housemates = more houseS!!! :P

    • +1

      When the jobless rate rise, lots of folks won't be able to pay their loans, especially the middle class that has investment properties as there's unlikely going to be any sort of financial aid for those non-essential stuff since its not a residential property. They will default, triggering lots of supply. Demand will dip too at the same time given the investment market will likely dry up unless the rich foreign investors coughthechinesecoughcough starts their buying spree again or the superfunds all go nuts on reit sector to capitalize on low prices. Lots of supply over demand will push the market price down. The very low interest rate will help first home owners a lot as well.

  • +5

    God I hope it goes below 5000.

    • +11

      Some people just want to watch the world burn :p

      • +4

        No pain no gain 😝

    • -6

      It happens so rarely, but I really love it when rich people (eg shareholders) lose a lot of money. If only the same would happen to landlords/house investors.

      • +9

        Sorry to inform you that most people working have shares in super and at this stage less for retirement .
        Doesn't distinguish between rich and poor workers .

      • +1

        Can I ask what you do for work?

      • +2

        Mate, the rich people aren't losing money, they will either hold, or buy more when it's low.

        • They're doing it right now, with property….

      • +7

        Rich people are the ones who can afford to not panic and buy more.

        Guess who are the ones who put all eggs in one basket.

        Answer: Those with only 1 egg.

      • Well, hopefully you don't work for a listed company, have your legally required superannuation, or rely on any listed companies…because if so, this affects you.

        The clever lads will make good picks or have the gut to see it out.

        Big dumps in the market very rarely have good outcomes for the general population.

      • +2

        tall poppy syndrome. "I hate that some people are doing better than me."

        It's a lousy way to live your life.

      • I really love it when rich people (eg shareholders) lose a lot of money.

        You mean the same rich people who contribute around 79% of all personal income tax in this country? They lose, you lose.

        • actually they normally tend to have pretty intricate tax avoidance systems in place

          • @Hasbulla: Tax minimisation is legal. If not the wealthy, which group would you say is paying the lion's share of personal income tax then?

            • @[Deactivated]: The problem is that tax minimisation is legal: Franking credits, family thrusts, donations, negative gearing, the list goes on forever. All stuff more likely to be done by the top end of town.

                  • @Hasbulla: From your link :

                    It is not known whether their behaviour triggered a tax audit as deductions are scrutinised by the ATO and any attempts to minimise tax must comply with tax laws.

                    This is one reason that Tony is in minority – 99 per cent of people who earned more than $1 million remained in the top tax bracket after deductions.

                    • @[Deactivated]: Which could mean that the can have deducted over the 80% of this first million. Up to a lot more.

                      Tax avoidance is a crime in Europe.
                      The national sport in Australia.
                      Trickle down

                      • @Hasbulla: The fact remains that those in the wealthiest tax bracket in Australia pays the lion's share of all personal income tax. In 2017-2018 , if we include young adults and pensioners, this was equivalent to 78.7%. Modelling pre-pandemic suggested this would have increased to 81.3% in 2024-2025.

                        Thaal Sinestro on 12/03/2020 - 08:31
                        It happens so rarely, but I really love it when rich people (eg shareholders) lose a lot of money. If only the same would happen to landlords/house investors.

                        Gleefully wanting them to lose money and thinking it will have no repercussion on all Australians is just plain dumb. It's like hoping the golden goose will lay a smaller golden egg or no egg at all. Who in their right mind would do that?

  • +3

    The time to buy will be after the first neo bank or building society fails

    • +2

      Ooh, this afternoon then?

      • possibly

      • Dow Jones Futures are already down 1047 points so there's another 4%

        • Dow Futures now -1255

          • @IanC: I am pretty sure that is priced in. It will be interesting if Dow falls more than 5%. i hope so as I am going to buy some VGS tomorrow

            • +4

              @FiDad: Hope you are right.

              VGS. >>>> Very Good Stock. ?.

              • @IanC: Vgs is an index made of developed economies excluded oz. I think it got about 3500 stocks in it

                • @FiDad: Thanks.

                  I almost bought MVW a few weeks back thinking the equal weighting may help

            • @FiDad: There is a 5% limit in place which has triggered a halt in any further futures trading. This is a circuit breaker to prevent prices falling through the floor.

              The open market circuit breakers are less strict. It would take a 20% drop to halt all trading for the remainder of the day. But there are also other smaller levels which force the market to pause trading for 15 minutes.

              • @wizzlesticks: Yes trading haltgot triggered but still the dow is down 7.7% for the day so far

            • @FiDad: Possibly a buy atm with the dow futures up

              • @IanC: Don't forget about the dead cat bounce.

                • +1

                  @wizzlesticks: yes …posted about 5 hours back.

                  IanC 5 hours 48 min ago
                  Dead Cat just bounced past the window.

                  Is it a sign?

                  Just wait till Morrison slaps another levy on the big 4

                  Cat still hasn't fallen back

                  • @IanC: Just fell back past the window as expected

                    • @IanC: Sad news.

                      The cat is dead on the ground.

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