The Analyst: Cash to spare? Then jump in and buy

Many investors expend great effort trying to predict which way stock markets will move from one day to the next. I believe they are worrying themselves unnecessarily; in my opinion, "time in the market" and not "timing the market" is the best philosophy.

Statistics from the fund manager Fidelity show that missing just the 20 biggest daily market rises over the past 15 years would have cut your returns in half. Ironically, these best days often happen during the toughest periods. For example, on 12 March 2003, the UK market fell by more than 4 per cent, but the next day it rose by more than 5 per cent.

This is not the time to let fear rule your decisions. I have seen words such as "crash" and "disaster" used in the media recently, but my advice is to step back from the emotion and look at fundamentals. Those with some cash to spare can now buy many shares or funds 10 per cent cheaper than they could a month ago; perhaps you should treat it as a summer sale.

So what has caused the recent market problems? Much of the blame has been levelled at US sub-prime mortgages – loans to people on low (or no) incomes – which have seen a sharp rise in defaults.

The resulting difficulties are an example of how everything is connected in the modern global economy. Financial institutions across the world have taken on a share of these loans, so the damage has been spread over a wide area. Total losses are estimated at about $250bn, but in the context of world money markets, that is actually not a large sum. The problem comes because institutions have borrowed on the back of these loans, and now need to sell other investments in order to meet their liabilities. In a short space of time, the atmosphere of the market has gone from confidence to uncertainty.

A similar problem was encountered in 1998, when markets faced the twin problems of a major hedge-fund collapse and the Russian government being unable to pay back its debts.

In my opinion, the current situation is nothing like as serious as that. Most stock markets look cheap by historic standards. In the UK, the largest companies seem particularly good value; they have healthy cash balances and strong earnings, but have been overlooked by investors for five years. I won't attempt to predict the bottom of this current shakeout, but I would suggest that markets remain attractive on a long-term view, and I suggest that investors consider buying on the weak days.

I am also a great advocate of drip-feeding money into markets. The obvious way is to set up a monthly savings plan, taking the emotion out of investing. Your pension is probably already being invested this way and regular payments are an excellent way of saving for children or grandchildren.

But which funds are worth attention? In the UK, I would look especially at funds investing in larger companies, such as Schroder UK Alpha Plus, Artemis Capital and M&G UK Select.

On the equity income side, I would stick to the big guns such as Invesco Perpetual Income, Artemis Income or Jupiter Income.

The financial sectors have taken a pummelling in recent weeks, but I think they will also recover the fastest. For that reason, I believe the Jupiter Financial Opportunities Fund could be a good choice.

The manager was expecting some difficulty and had a large chunk of the portfolio in cash – and I'm sure he will be putting it to good use on the market's weak days. For Asia and emerging markets, I believe that Aberdeen, First State and Melchior are among the best ports of call. Elsewhere, European funds from Cazenove and Artemis could also be on your shopping list, while in America my picks are the Legg Mason US Equity and M&G American funds.

I will be covering many of these funds in greater detail in future columns. They are all run by managers with considerable experience, who are used to seeing downturns in the market and won't panic or over-react.

Often, the most difficult thing to do in this situation is to be patient. However, long-term investors with cash ready to invest should be rubbing their hands with glee at this opportunity to pick up quality investments at bargain prices.

Mark Dampier is the head of research at Hargreaves Lansdown, the asset manager, financial adviser and stockbroker. For more information about the funds included in this column, visit

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at

Arts and Entertainment
The Ridiculous Six has been produced by Adam Sandler, who also stars in it
filmNew controversy after nine Native American actors walked off set
Life and Style
The original ZX Spectrum was simple to plug into your TV and get playing on
techThirty years on, the ZX Spectrum is back, after a fashion
Finacial products from our partners
Property search
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Claims Administrator

    £16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

    Recruitment Genius: Senior SEO Executive

    £24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

    Recruitment Genius: Online Customer Service Administrator

    £16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...

    Recruitment Genius: Digital Marketing Executive

    £18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...

    Day In a Page

    'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

    Bread from heaven

    Dutch survivors thank RAF for World War II drop that saved millions
    Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

    How 'the Axe' helped Labour

    UK will be 'run for the wealthy and powerful' if Tories retain power
    Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

    The price to be paid for challenging the rule of extremists

    A revolution now 'consuming its own children'
    Welcome to the world of Megagames

    Welcome to the world of Megagames

    300 players take part in Watch the Skies! board game in London
    'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

    Charlotte Gainsbourg on 'Nymphomaniac'

    Starring in one of the most explicit films ever
    Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

    Robert Fisk in Abu Dhabi

    The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
    Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

    Vince Cable exclusive interview

    Charging fees for employment tribunals was 'a very bad move'
    Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

    Iwan Rheon is returning to his Welsh roots

    Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
    Russell Brand's interview with Ed Miliband has got everyone talking about The Trews

    Everyone is talking about The Trews

    Russell Brand's 'true news' videos attract millions of viewers. But today's 'Milibrand' interview introduced his resolutely amateurish style to a whole new crowd
    Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

    It's time for my close-up

    Meet the man who films great whites for a living
    Increasing numbers of homeless people in America keep their mobile phones on the streets

    Homeless people keep mobile phones

    A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before
    'Queer saint' Peter Watson left his mark on British culture by bankrolling artworld giants

    'Queer saint' who bankrolled artworld giants

    British culture owes a huge debt to Peter Watson, says Michael Prodger
    Pushkin Prizes: Unusual exchange programme aims to bring countries together through culture

    Pushkin Prizes brings countries together

    Ten Scottish schoolchildren and their Russian peers attended a creative writing workshop in the Highlands this week
    14 best kids' hoodies

    14 best kids' hoodies

    Don't get caught out by that wind on the beach. Zip them up in a lightweight top to see them through summer to autumn
    Robert Fisk in Abu Dhabi: The acceptable face of the Emirates

    The acceptable face of the Emirates

    Has Abu Dhabi found a way to blend petrodollars with principles, asks Robert Fisk