The Share Market Tumbles Due To Argentina’s Debt Default – Should You Panic Now?

fear dice

It is official; last night Argentina defaulted on its debt for the second time in 13 years. The alarming news sent shockwaves through many share markets. The S&P 500 index in the USA fell 2% last night while the  Straits Times Index (SGX: ^STI) is down almost 1% as of the time of writing.

In short, the markets are panicking. But, should you?

Actually, financial markets around the world tend to suffer from shocks every once in a while. Remember Thailand’s Coup or the fear of the US Federal Reserve’s tapering programme?

As long term investors, there’s actually a simple truth: If we’re focused on finding great companies that have strong economic moats, that are managed by capable management teams, and that are trading at the right price, there is likely nothing much to fear but fear itself.

A striking example of how a focus on the long-term have delivered great returns is that of companies like Ezion (SGX: 5ME) and Aspial Corporation (SGX: A30). Since the start of 2004, the duo have gone through numerous crises such as the Global Financial Crisis, the Japanese Tsunami, and the Thailand Coup just to name a few. Yet, they’ve still rewarded shareholders with gains of more than 2000% in a little over 10 years. 

Given the crisis Argentina’s seeing today, if it leads to further market malaise, shouldn’t investors view it as an opportunity to hunt for bargains?

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim doesn't own any shares of companies mention above.