Across the country, investors have been checking their Stocks and Shares ISAs and shaking their heads in response. Some of our most popular ISA investments have been tumbling, so the reaction is understandable.
But I think it’s a mistake to be gloomy, and we’re really just looking at new buying opportunities. Let me explain what I mean.
According to ISA provider AJ Bell, these are the most popular shares chosen by their clients in in 2022, and I’ve added their price performances:
| Company | 12-months | Year-to-date |
| GlaxoSmithKline | +25% | +5.5% |
| Lloyds Banking Group | -7.3% | -4.6% |
| Rolls-Royce | -14% | -24% |
| Vodafone | -1.9% | +12% |
| BP | +34% | +33% |
| Unilever | -15% | -5.8% |
| Tesla | +18% | -32% |
| AJ Bell | -34% | -24% |
| International Consolidated Airlines | -36% | -12% |
| National Grid | +22% | +6.4% |
| Average | -0.9% | -4.6% |
At first glance, the overall falls aren’t too bad. But the FTSE 100 has done a lot better, up 7.6% over 12 months and 3% so far in 2022.
And these are this year’s purchases which include a lot of defensive buys.
People who invested in growth stocks last year, before the big sell-off, will surely be doing even worse.
So should we give up actively managing our Stocks and Shares ISA accounts and just buy a FTSE 100 index tracker?
As it happens, I think a tracker can make a very good long-term investment. It’s something we can just set up and forget.
But I want to keep making my own choices. So what’s the best way to invest when our shares are falling?
Warren Buffett’s quiz
I’m going to turn to billionaire investor Warren Buffett for inspiration. In his 1997 letter to Berkshire Hathaway shareholders, he posed the following challenge:
“A short quiz: If you plan to eat hamburgers throughout your life and are not a cattle producer, should you wish for higher or lower prices for beef?“
The answer is obvious, right? He continued:
“But now for the final exam: If you expect to be a net saver during the next five years, should you hope for a higher or lower stock market during that period? Many investors get this one wrong.“
Most Stocks and Shares ISA investors today have decades of investing ahead of them. As net buyers, we should all be happy to see share prices falling so we can get more and more good stuff for the same money, shouldn’t we?
Cashing in our investments
We’ll reach a time when we stop investing and start drawing down the cash. And bad spells won’t do us any good then. To cope with ups and downs, I’ll probably have all my cash in income-paying investment trusts by that time. They can even out their dividends and keep them going over good years and bad.
But until that time, Buffett sounds clearly right to me. When stock markets go through tough patches and share prices fall, it’s time to just keep on buying. And stash away even more shares for the same outlay.