It has taken nine months, but the UK stock market has now completed its long, slow grind into official bear market territory. From a peak last April, the FTSE 100 is down around 22%. The shocks started last August when the main index fell by more than 9% in a week. Valuations drifted after that, and the first six weeks of 2016 have been pretty painful to watch. Unlike the the sudden sell-off you might see after a black swan event, this decline has been slower to unfold, but the downward trend is so far inescapable. Rather than one knockout punch, investors have been forced to take tiring jabs on a regular basis.
Faced with this sort of chart – the FTSE All Share (below) – and the clear slide into correction mode, it’s obvious to wonder about the best course of action. In recent days we’ve seen a lot of discussion about how to handle these conditions. So here are some ideas to consider from previous experiences of stock market declines and shares that appear to be in freefall.
1. Falling prices can be desirable
It might sound counter-intuitive, but for investors with a long, potentially…
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