It is usual for share price to go through three stages during a...

It is usual for share price to go through three stages during a market crash.

During the first stage we think that the drop in share price is temporary and share price will rebound.

During the second stage we think that the drop in share price is worse than anyone could have expected.

During the third stage we think that the drop in share price is never going to end.

Stage 1
WBC hit $30.05 intra-day high and closed at $29.92 on 24Sep19. It traded above $30 a few times in Sep19 but it dropped from $30's in Sep19 to $24's in Nov19 driven by the AUSTRAC news as well as ex dividend trading. This equates to drop of around 20% in just 2 months.

WBC hit intra-day low of $23.86 and closed at $24.04 on 04Dec19. WBC hit $25.96 intra-day high and closed at $25.81 on 21Feb20. If you add dividend payment of $0.80 plus $0.34 franking credit then the net drop in price is around 10% from its $29.92 high over a period of 4 months.

Price drop of 20% over 2 months and price recovered around half of that drop in the following 2 months. Share price drop was temporary and share price rebounded. Stage one criteria ticked.

Stage 2
WBC fell from its recent high of $25.81 on 21Feb20 to $15.53 intra day low and closed at $18.12 on 13Mar20. This equates to drop of just under 30% from its recent highest close of $25.81 in just 3 weeks. If you add dividend payment of $0.80 plus $0.34 franking credit then the drop is around 25% over this 3 weeks period. This price drop was driven by a black swan event that no one saw coming. If someone claims that they saw it coming then they might have a crystal ball to see the future and tell us when this pandemic will actually end.

Price drop of 30% in just 3 weeks!!! Share price drop was worse than anyone expected. Stage two criteria ticked.

Stage 3
WBC fell and hit $13.47 intra day low and closed at $14.10 on 23Mar20. This equates to drop of another 22% in just 6 days. Since then WBC has traded as high as $17.59 on 31Mar20. It closed at $16.70 on 01Apr20 which equates to 18% recovery from its lowest close of $14.10 on 23Mar20.

As WBC share price keeps dropping, naysayers keep saying that WBC share price is going to keep dropping even lower and lower to ridiculous levels and its share price drop is never going to end.

In my opinion, we are in the stage three at the moment and the turnaround is going to happen any day or it might have already started. My belief is that we are sowing the seeds now and will be reaping the rewards later. We need to stay calm and buy WBC shares at these crazy low prices.