COVER STORY Market crashes
On 16 March last year , for example , when the S & P fell 7 % ( in dollar terms ) shortly after the open , circuit breakers kicked in for the third time that week . Yet they failed to halt the selloff and the index closed 12 % below its opening price , its third largest one-day loss of all time . The week that followed may not have felt like the perfect time to invest , but it was .
A fool ’ s errand This is one reason why numerous experts describe trying to time the bottom of the market as a fool ’ s errand . “ You might as well try to hit a bullseye blindfolded and standing on one leg ,” says Khalaf . “ Instead , dripfeed your money into falling markets gradually . That way , you ’ ll pick up cheap shares as you go along , even if you don ’ t ever catch the absolute bottom .” Burns agrees with Khalaf , pointing to the famous quote by financier Bernard Baruch : “ Don ’ t try to buy at the bottom and sell at the top . It can ’ t be done , except by liars .” “ But one strategy is to steadily drip money in over time rather than allocating in one large dollop ,” he adds .
Choose you
For investors who want to make the most of the recovery , Penny notes small-cap , cyclical and value stocks tend to do the best in a rebound . Emerging markets are also a good bet .
Hornby says that a good rule of thumb following a crash caused by the bursting of a speculative bubble is to avoid
Performance of in
MSCI World / Informat
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Source : FE
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