Managing the downside – basic risk management for tough markets

I genuinely do sympathise with anyone who started investing in stock markets for the first time in January 2016. It’s not been an easy environment – but let’s get one thing straight it’s not exactly been bad. If you’ve invested through 2000 and/or 2008 you’ll know what bad really is and it’s much, much worse than it is now. The year to date return for the FTSE 100 is a 4.4% fall, which is pretty much on par with last year’s lame showing and perfectly in the range of normal for stock markets. From comments on the Stockopedia.com website it’s been clear that many investors are nursing losses worse than this and with all the recent uncertainty over Brexit they are wondering what to do. What’s going to happen next? Well I’ve learnt the futility of forecasting so can proudly say I have absolutely no idea, but I do know what’s happened in the past and while history never repeats, it often rhymes. So let’s read the rhyme.FTSE 100 return historyIn my database I’ve got FTSE 100 price histories back to 1984. That’s a period that covers 2 massive bear markets and one of the longest bull markets in…