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Shares Magazine
Don’t panic. Stick to your plan. These are words to live by when markets get choppy as they have done since the beginning of March as simmering tensions in the Middle East escalated to armed conflict. There is absolutely no reason to lose faith in investing. It is important to remain optimistic and focus on the long-term potential for your money to grow by owning investments.
Getting over the discomfort
There’s no doubt that it can feel uncomfortable investing in the current circumstances but it is important to understand that share prices should move up and down. Going up in a straight line is not normal.
Time and time again the stock market will go through a wobbly patch and you’ll get days of big share price movements. By staying invested you are ready to play market recoveries which often happen faster than you might think.
The recent correction will have put a dent in most people’s portfolios and no-one knows exactly how things will pan out over the next few days and weeks. However, over the longer term, the financial markets have proven to be a reliable way of creating and augmenting wealth.
A retreat to cash could be costly, particularly if inflation increases from here to erode the value of money stashed in the bank.
One thing to start thinking about, for those with the appetite and funds available, is potential opportunities which have been created by the market volatility. Often in a downturn selling can be indiscriminate which means good companies (and funds and investment trusts) get sold off alongside the bad.
That said, you should think very carefully about any risks to each stock or fund and if you’re not ready to take action yet you could instead draw up a shopping list of potential opportunities and the levels you might want to buy in at.
Alternatively, you can drip feed money in rather than putting everything in at once. You may already have regular investment set up and if you do, it is worth sticking with when markets are bumpy.
By investing a set amount every month, you benefit from an effect called pound cost averaging – you buy more with your money when markets are low and less when markets are high. You are not trying to time the market perfectly, a skill few can master, and you’re maintaining a healthy investing habit.
How does the sell-off compare?
The current sell-off is sizeable but worth keeping in perspective for now. Since markets closed on Friday 27 February before the US-Israeli strikes on Iran were launched, the FTSE 100 is down 4.6% (as of 10 March) having traded down as a much as 7.5% at the low point.
The big white whale of market corrections is the one that accompanied the global financial crisis. Between October 2007 and March 2009, when equities bottomed out, the FTSE fell more than 45% and the US S&P 500 index more than halved.
During the covid pandemic markets fell very sharply in a short space of time, from late February to mid-March the FTSE 100 was down nearly 30%.
More recently still, the Liberation Day tariffs announced on 2 April by the Trump administration caused the FTSE 100 to fall more than 10% in the space of a week.
Why time in the market beats timing the market
The chart below based on research from BlackRock shows how a hypothetical $100,000 investment in stocks would have been affected by missing the market’s top-performing days over the two decades from 1 January 2006 to 31 December 2025.
Someone who remained invested for the entire period would have accumulated $806,201, while an investor who missed just five of the top-performing days during that period would have accumulated only $497,945. Often the best days for the market follow the worst.
Tom Sieber: Content Editor
Tom Sieber is AJ Bell's Content Editor. He was previously the Editor of Shares Magazine. He has been with the business since 2012.
Tom is a regular contributor to the AJ Bell Money & Markets...
