The hefty swings witnessed in the FTSE 100 index in recent times are doing nothing for the confidence of the ordinary investor. All it seems to signal is that investing in top UK registered companies is nothing other than a lottery.

Most of us were brought up to believe that investment in stocks and shares was for the long term. We also thought that the stock market was an accurate leading economic indicator as it focused at least six months ahead and had already discounted the likely future events in its stock pricing. Not so now.  What we are witnessing is reminiscent of a herd of wildebeest on the open plain, sniffing the breeze for the slightest whiff of trouble and then when they sense it, stampeding in the opposite direction. 

How is the small investor supposed to have the slightest confidence in the market in these circumstances? We have always known that the herd instinct was a powerful factor in market movements, but the recent volatility in the markets has exposed the degree to which they are now operating to the shortest of timescales and on the flimsiest of indicators.

While these conditions remain, ordinary punters’ faith in the whole system will remain very jaundiced and only a sustained bout of sanity will be enough to entice them back in.