Turbulent stock markets are always a worry for the investor. The last month or so has seen falls in the world's equity markets, followed almost immediately by a partial recovery.
There is no scientific way of determining what will happen to markets and those who try to time the markets usually get it wrong. Anyone who does manage to call a rise or fall correctly has done so more by luck than judgement.
As worrying as these falls can be, they are a natural feature of investing in equities.
No-one likes to see the value of their investments going down in value. At these times, the instinct for the private investor is to sell to avoid further losses. However, once sold the opportunity to enjoy any "bounce" in prices is lost.
On the contrary, these falls in the market provide investment opportunities in that prices are lower than they were a month or so ago.
For those about to invest and feeling nervous about doing so, rather than investing in one go phasing or drip-feeding into the markets over a period of time can be more palatable.
Typically phasing is done over a six-month period, though many of my clients invest their ISA subscriptions spread over 12 months as a matter of course.
The advantage of this phasing is that the average purchase price can be lower than if the investment is made on one specific day. Most of us are familiar with this as we save regularly into our pensions or other savings plans.
A market downturn is a good time to reconsider an investment strategy.
During a bull market, when share prices go up and up, people feel more confident and are often happier taking more risk with their investments.
As markets rise virtually all of our investments will also rise, so any under-performance does not necessarily stand out.
The other potential problem is that I often see portfolios with a larger exposure to higher risk funds, such as smaller company or emerging market funds, than I would normally recommend.
Conversely in bear markets, when prices fall (or during volatile times), investors are more cautious.
During these times the tendency can be to revert to cash.
This isn't a bad thing in the short term; the problem arises in knowing when to go back into the markets and holding back for too long.
That being so, now might be the time to consider how much of a portfolio is invested into the main asset classes: equities, fixed interest, cash and other assets, including commercial property funds.
They are unlikely to still be in the same proportions as they were when first invested so a review to realign the allocation of assets could be appropriate.
It also becomes a good time to review portfolio selections and remove poor performing funds or shares.
The difference between the best performing funds and those that are average, or even worse, is usually significant.
For example, Richard Buxton manages the Schroder Alpha Plus Fund. Over the last five years this fund has produced a return of 138%. The average return in the sector, measured by the IMA All Companies index, was 87% over the same period.
A fall back in prices will also lower profits and therefore lower tax on the sale of any taxable investments such as unit trusts or shares. This also makes now a good time to go through this process of review.
Falls in equity markets are perhaps felt the most for those who are just at the point of retirement.
Just at the moment when the pension fund is going to be converted into tax-free cash and an annuity, a market fall can have a direct impact on pension income.
Many pension funds have an automatic feature to solve this problem, known as "lifestyling".
Essentially under a lifestyling option the pension fund is gradually moved from 100% equities to 100% fixed interest and cash in the five years prior to retirement.
This protects the growth built up in the pension fund over the years.
Lifestyling is perfect for those who save into a pension for years and who do not necessarily monitor their pension funds regularly. This brings me back to time in the market.
Equity investment should not be made for less than a five-year time scale, and preferably it should be longer.
History tells us that investments of more than five years-plus are more likely to show positive returns, even over periods of large market falls, than shorter periods.
Time in the market is better than trying to time the market.
If in doubt it's always best to seek expert advice.
Nigel Lennox works for Hargreaves Lansdown Financial Practitioners. He can be contacted at Nigel_lennox@hargreaveslansdown.co.uk, tel: 028 9076 8559.