The end of the world as we know it ?

Well, the stock markets around the world have certainly suffered a rout this week.

Last Friday, 21 February, the FTSE100 closed at 7,404.  It closed today at 6,581 representing a one-week fall of 11.1% and now dipping into 'correction' territory. 

run away, run away !!

Today's the last working day of the month, so as usual I've updated my combined portfolio spreadsheets and the summary doesn't make very pleasant reading.   And until Monday of this week, February had seemed quite a decent month !

My portfolio return for February was -4.1%, and is -5.0% since the beginning of the year.  It's holding up better than the FTSE100 but is still well down in absolute cash terms (this -4.1% is the biggest monthly fall I've encountered in the seven years since I started tracking everything properly - the previous worst month had been -4.0% in August 2015).

But isn't this slump in the equity markets exactly what we've all been waiting for, at least those of us still in the accumulation phase ? 

So, how best to capitalise on what could either be a time-limited buying opportunity or a razor-sharp falling knife ? 

What if we pile in too early, and the markets continue to slide ?  Or what if we wait for further falls but the markets stage a V-shaped recovery, and the boat has sailed before we act ?

My simple plan is based on one very major assumption, i.e. within my future investment accumulation period, global markets will recover to at least where they were last Friday.  I think this is likely, but it's by no means guaranteed ...

During the latter part of this week, I've spent a five-figure sum buying equity funds, in the form of top-ups to existing positions.

So the plan going forward is as follows :-

• if the FTSE100 index at around 11:00 next Friday morning is lower than its closing value today, then I'll spend another five-figure sum on either further top-ups or opening new positions in equity funds from my watch list.

• rinse and repeat, i.e. every Friday morning I'll check the FTSE100 index and if it's lower than the close on the previous Friday then I'll again spend £10k on buying equities.

• there could be weeks when the FTSE is higher than the previous Friday's close, but still well down on its valuation before last week's rout.  On the first of each of these occasions I'll buy nothing that week.  However, if the increase in the index valuation persists for a second consecutive week, but the FTSE100 index remains below 7,000, then at that time I'll spend a further £10k on equity funds.

• the process will continue until either (a) the FTSE100 is back above 7,000 or (b) I run out of available cash within the investment accounts.

• this plan will be funded using only the cash balances in the portfolio accounts - I've no intention of selling down existing portfolio assets to raise more funds.  But, depending on how long the situation persists, I might add cash to my 2020-2021 ISA much earlier than usual - unlike many of the FI bloggers who seem to deploy all of their allowance immediately at the start of each tax year, I usually wait until the very end of the year before contributing to the ISA.

Anyway, let's see how this strategy plays out over the coming weeks.

Note that this is certainly not advice or a recommendation, I'm not a financial adviser ...