Remember Black Monday in August last year, when the Chinese stock market crashed by 8.5% and the FTSE 100 plunged4.5%?As hysteria gripped global markets,Gordon Browns ex-adviser Damian McBride showed his mettle by urging everybody to panic-buy tinned food and bottled water. And then theroof of the world caved in so thattoday we live in a post-apocalypticdoomsday world with no hope.
Exceptthat last bit didnt happen. Last time I looked, the roof of the world was still there, and if you want to know what a post-apocalyptic doomsday world with no hope looks like, youneed to buy an Xbox. While McBride was rushing around telling everybody to lose their heads, I penned an article urging peopleto keep calm and carry on investing (and keep drinking the tap water).
I said that ifyoulooked beyond the panic, there weregood reasons to stay calm, adding: If you take the longer-term view, as we do at the Fool, you will seethat this is merely a stock market shiver. And like every singlestock market shiver that has come before, it will pass.And so it cameto pass. Markets stabilised, panic subsided, and all thattinnedfood is sitting on the shelf, unopened.
Grin And Bear It
It is worth reminding ourselves of all this, as markets crash once again. The FTSE 100 is down 3% today. Over the last year, it is down 20%. There is no denyingit: we are in a bear market. Your portfolio has more claw marks than Leonardo DiCaprio in The Revenant, and so does mine. For what its worth, I reckon there is morepain to come. I say for what its worth, because nobody knowsfor sure. I started the year in a pessimistic mood, but even I didnt expect 2016to begin with an outright bloodbath.
One week today I wrote: the market will crash further so get ready to buy shares. With the FTSE plunging below 5700 today, that moment is getting closer. At some point, when we least expect it, sentiment will spin on a sixpence, and people will start buying shares again. Those whoget in early will pick upthe best bargains.
If you could accurately predict these things, you would be super-wealthy, but you cant. Nobody can. What you can do is take advantage of market dipslike this oneto buy no, not CampbellsSoup and Highland Spring but stocks and shares of quality companies at reduced prices.
Top Stocks Going Cheap
Dont expend all your ammunition in one go. Buy alittle today, and if markets fallfurther, buy a little bit more. Top FTSE 100 stocks such as Barclays, British American Tobacco, Lloyds Banking Group, Reckitt Benckiser, Unilever and Vodafone arentabout to collapse, and noris the roof of the world.
Braver investors than I might even dive into the oil sector, having decided that troubled oil giants such as BP and Royal Dutch Shell areripe for a revival. Crazy heads mighteven be tempted by mining giants BHP Billiton and Rio Tinto, although I wouldnt touch them myself. Or you could spread your bets by taking outa FTSE All Share tracker.
Whatever you do, keep calm. The current mayhem wont last forever. And when things settle, you will be glad you took advantage of todays low valuations to carry on buying shares.
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Harvey Jones has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended Unilever. The Motley Fool UK has recommended Barclays, Rio Tinto, and Royal Dutch Shell B. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.