Sit Tight and Don’t Panic!

Douglas Adams nailed it when he wrote The Hitchhiker’s Guide to the Galaxy and insisted that each copy should have “Don’t Panic!” emblazoned on the front.

It’s sound advice—and very relevant when it comes to investing.

Over the years, I’ve witnessed several market drops—some gradual, others abrupt, like the one we’re currently experiencing.

Let me take you through a few:

• Black Monday, 1987 – The FTSE took two years to recover to pre-crash levels.
• Late 1989 – A mini crash that bounced back within three months.
• July 1990 – Triggered by the invasion of Kuwait; took seven months to recover.
• Black Wednesday, September 1992 – Recovered in a fortnight. More of a blip than a drop, but it still unsettled investors.

While the headline-makers are what stick in people’s minds—anything with "Black" in the name, the Dot-Com Bubble, 9/11, the 2007–08 Credit Crunch, the 2011 US credit rating downgrade, Brexit, COVID, Ukraine, Gaza, Trump—the truth is that markets move. At home and abroad, they dip, rise, correct, and, given time, the financial world heals itself ©.

(I’ve Googled that phrase, and since I can’t find it elsewhere, I’m claiming it!)

Even when investment values are flat, currency fluctuations continue in the background, nudging returns up or down.

But Here’s the Key Point

This is what investments do. Markets go up and down. And with a suitably diversified portfolio—tailored to your personal goals, whether that’s funding a future expense, providing retirement income, or building a legacy—the occasional drop (like we’ve seen recently) should be viewed as an irritation, not a crisis.

Being an investor is a mindset. It’s about accepting that markets may fall in the short term, but having the confidence (through experience, education, or guidance) that, over time, you’ll come out ahead.

One thing that is guaranteed to derail that journey? Selling when prices are low just because everyone else appears to be doing the same.

(Of course, you don’t see them selling—you see the result, as indices flash red and numbers turn negative.)

This is often due to large numbers of investors holding Trackers, which automatically sell shares when the underlying index falls—creating a feedback loop that can amplify losses.

There’s nothing wrong with a passive approach. It works well when markets are stable. But in volatile times like these, nothing beats the considered decisions of a human mind—or a team of them.

That’s why I advocate a hybrid approach: combining active and passive strategies within a broad, diversified portfolio. You never know which one will shine until the event has passed—by which point, the bandwagon has already left the station.

Hints and Tips

Don’t panic sell. You’ll only turn paper losses into real ones.

• If you already sold in a rush, don’t beat yourself up. But don’t let it stop you from being an investor in future—just plan your return with care and support.
• Diversify. If you haven’t already, now’s the time to review your portfolio. What’s your money really doing for you?
• Consider model portfolios. These allow you to benefit from shared expertise at low cost, with regular adjustments as market conditions evolve.
• Segment your portfolio. Know what you’ll need to spend and when—whether it’s one-off or regular—and plan accordingly.
• Reassess your risk. Don’t assume you’re now a low-risk investor just because you’ve experienced losses. Your future goals and current circumstances matter more than past fears.

A Couple of Phrases I Love

I’ll finish with two sayings—neither of which I can claim as mine, but both worth remembering:

• “Volatility creates opportunity.” Or, in the softer version: “If life gives you lemons, make lemonade.” If markets only ever went up in a straight line, there’d be little room to adjust or optimise your holdings—especially if you want to live by that old adage: buy low, sell high.
• From Kenny Rogers’ classic The Gambler:
  “Know when to hold ‘em, know when to fold ‘em, Know when to walk away, know when to run.” Investing isn’t gambling—but it does involve risk. With knowledge, experience, and, where appropriate, professional guidance, you can ensure your decisions are based on strategy—not stress, headlines, or herd behaviour.

While some may equate investing with gambling, it’s a calculated risk. And it’s with knowledge, experience, or the support of professionals that you can make the right decisions at the right time—not simply react to the latest headline or TV commentator urging you to follow the crowd.

These are general suggestions, not personal financial advice. But if you’d like tailored guidance—whether that’s reassurance, a sense check, or a full portfolio review—get in touch.

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