ASX Investors Feel the Heat as Markets Dive

It’s been a tough week for investors on the ASX. Just on Friday, the S&P/ASX 200 Index took a big hit, falling by 2.1% and then sliding another 2.7%. You can tell there was a lot of selling going on, and it seems like everyone might be feeling a bit nervous.

So why do investors jump ship when they see others selling? It’s that classic herd mentality. When the market is going up and other people are buying, many of us feel inclined to jump in as well. But when the selling begins, we often feel the urge to follow suit, worried about losing even more money as the market drops further.

This behavior makes sense to a certain extent. When everyone around you seems to be making the same decision, it can feel comforting. After all, how could so many be wrong? But history has shown that the most successful investors are often those who take the opposite approach from the crowd.

Take Warren Buffett, for example. He’s often seen as the quintessential investor who has managed to build his fortune through careful investing in various businesses, primarily through his company, Berkshire Hathaway. Unlike many billionaires who got rich by starting their own businesses, Buffett’s story is all about smart investing, making his insights incredibly valuable.

Buffett has a famous perspective on buying versus selling when it comes to stocks. He once posed an interesting thought exercise: If you’re going to be buying hamburgers for life, would you want prices to go up or down? The answer is obvious—lower prices are better for buyers. The same logic applies to anyone planning to invest in stocks. If you’re looking to buy more shares in the future, you should actually prefer that prices go down, not up.

So, if you’re an ASX investor feeling the urge to sell because of recent market drops, take a moment and ask yourself what Warren Buffett would do. Chances are, he wouldn’t be selling during a dip; he would consider buying the shares that others are letting go. Instead of panicking, it might be worth considering how you can apply a long-term perspective to your investments, rather than rashly following the crowd.