In my previous post last week, I was celebrating 2.5 yrs for my blog. During that time, the markets have mainly risen without a great deal of turbulence. They say the markets can climb a wall of worry and the crash comes out of a clear blue sky.
Earlier this year the FTSE 100 reached its all-time high of over 7,100. At the time of posting it is 5,900 - a fall of ~17% in the past 4 months. However it has fallen over 10% in less than 2 weeks.
For some reason, investors get jittery when the markets fall sharply. In a recent post on the sort of combinations needed to be successful, I mentioned the possibility of making poor decisions during periods of volatility - I should know as I have made plenty in the past.
Part of this process stems from paying too much attention to scary media headlines - "World Markets in Turmoil"! or "Biggest one-day Fall for 10 years - whats going on"! combined with the fact that our portfolio losses hurt much more than the pleasure experienced from stock market gains.
There may well be many investors who may have started investing over the past year or two and will not have experienced such turbulence and volatility. They will possibly start with the best of intentions to buy and hold for the long term but are now stung by losses of 10% or 15% in just the past week and who may well be thinking of cutting losses and selling up.