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Trampoline market shows investors must keep calm and carry on 

February 22, 2016

Simon Bain, HeraldScotland

The FTSE 100, which crashed to a five-year low on February 11, bounced back by nine per cent over just four days to regain the 6000 mark on Wednesday. It makes for testing times for small investors, but shows the wisdom of the standard ‘don’t panic’ advice being proffered by the experts 10 days ago.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “We’re in a trampoline market right now, where stocks are bouncing around wildly almost every day. The implication is that fundamentals have gone out of the window and sentiment is dominating market movements.”

So it makes sense to keep calm and carry on. “With markets so volatile, both buying and selling are likely to be painful experiences in the short term,” Khalaf says. “But long term investors can take some comfort from the fact that the chance of getting a positive return from stocks increases with time spent in the market.”

But that is easier said than done.

A survey from online investment group Willis Owen reveals that UK savers and investors have lost some of their appetite for financial risk compared with a year ago.

Only 15per cent said they are willing to take a reasonable or substantial risk – down from 20 per cent a year ago. The proportion of people not prepared to take any risk at all with their finances rose from 40 to 45 per cent. Read more

 
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