This bear market has been way too fast – so far!

For systematic investors there has only been one problem with the savage effect of the Trump tariff moves on the share market.

The problem being that the market did not stay down as long as many would have hoped for, so that they could take advantage of the lower prices for longer.

The same goes for superannuation accounts, which are without doubt the biggest and most important form of systematic investing by millions of Australians.

The reason such a short market fall is less desirable is obvious when you look back over the longer term.

When you track an index over decades and imagine you had been investing systematically all through that time, via superannuation or even directly, the most impressive gains of all are those that were made deep in the murky depths of bear markets.

Liberation day let the bear roam for Nasdaq

In the US, the tariff announcements caused a brief bear market on the Nasdaq exchange – defined as a loss of 20% or more – but it didn’t quite reach that same mark as measured by moves in the S&P 500 or the Dow Jones Index.

The sharp fall was savage but short-lived, with the S&P 500 bouncing almost 12.5% since its low point was reached on April 8.

Now it is just 1.2% below where it closed before Liberation Day on April 2 and is only off 4.5% for the year.

The ASX 200 fell less and bounced well, having climbed 11.7% since hitting its trough two weeks ago, and is now up almost 0.5% for the year-to-date.

Capitulation day quickly put the bears back in their cage

Of course, the sharp market recovery followed on from President Trump’s big capitulation on April 23 when he assured investors he wouldn’t sack US Federal Reserve chairman Jerome Powell and also claimed he was making solid progress on trade deals with China and others.

So the dip was savage but it has so far been brief – and who knows when it may dip again – but for those who systematically invest in the market by putting a certain amount in every week or month, it has been yet another great example of the power of dollar cost averaging and the need to continue investing and not get worried about fast falls.

Some traders having a field day

Traders have a different mindset and some of them have done very well during the volatility that the tariff changes have brought, although most studies covering the broad majority of traders find that for every trader making large profits there is usually another one making losses.

Dollar cost averaging works its magic because it is totally automated, with the amount invested buying more shares when prices are low and fewer when prices are high.

It is quite simple to set up automated purchases either through broking websites or by personally purchasing a set amount of units in an ETF covering the ASX200 index.

While it is much easier said than done, now is not the time to throw logic out the window because a disciplined contributions strategy remains compelling even when markets are moving against you.

Could there be a double dip?

The other thing to bear in mind though is that double dip market falls are certainly not unheard of, and this time could be one of those occasions.

With imports from China drying up in the US and significant direct damage from the tariff policy still to show up in company earnings reports, it may be far too early to draw a line under this controversial US tariff policy.