UK share markets went into meltdown in September as investors ran for the hills. The FTSE 100 crashed 5% as the firesale of British assets like UK shares took hold.
Fragile market confidence means the FTSE index remains stuck around the 7,000-point marker.
I didn’t dash for cover even as the spectre of a fresh stock market crash emerged. In fact I looked for UK shares to buy as most others panicked. Investing as others flee for cover could boost my chances of becoming a stock market millionaire.
Listening to Warren Buffett
A great many of these investors would have made a stinking great loss by frantically selling their shares for less than they bought them for. They’d have failed legendary investor Warren Buffett’s most important tests: “Rule Number One: Never Lose Money. Rule Number Two: Never Forget Rule Number One.”
Investors who manage to master their emotions and ignore the market noise can avoid these painful losses. But this isn’t the only advantage.
Those who hold their nerve can take advantage of market panic to possibly make a fortune.
Just one FTSE 100 bargain
Humans are herd animals. We’re hard-wired to follow what the broader pack is doing. What’s more, we find it hard not to be governed by emotion when things get tough.
This is a toxic combination when it comes to investing. And it’s why a wide range of quality FTSE 100 stocks have been frantically sold off in recent weeks.
Take Dechra Pharmaceuticals as an example. In early September it reported “strong organic growth” in the first half as sales of its animal medicines rocketed 14% and underlying operating profits grew 9%.
Dechra faces a threat from increased costs, sure. But with meat consumption rising and plenty of scope for earnings-boosting acquisitions, the future here remains extremely bright.
Yet its share price has crashed by almost a quarter over the past month. This is just one great dip opportunity that I, as a FTSE 100 investor, have a chance to exploit.
Making stock market millions
Buying on the dip is a strategy that has created an abundance of stock market millionaires over the years.
Research in March showed that the number of US millionaires surge to an all-time high of 14.6m in 2021. According to financial researcher Spectrum Group, this jump was driven predominantly by wealth generated from domestic stock markets that soared from the troughs struck at the height of the pandemic.
The S&P 500 and Nasdaq US indices recovered 27% and 21% respectively over the course of last year. Those who bought in at the bottom of the market were therefore handsomely rewarded.
Getting rich like ISA investors
This isn’t a modern phenomenon. It’s also not one that’s exclusive to US investors.
According to HM Revenues and Customs there are now more than 2,000 Stocks and Shares ISA millionaires in the UK.
A vast proportion of these wealthy individuals invested heavily when stock markets crashed around the time of the 2008 financial crisis. And they made their fortunes during the following years as corporate profits recovered and share prices rebounded.
History shows that share prices always recover strongly from periods of turbulence. Buying beaten-down FTSE 100 shares today could significantly boost an investor’s chance of making brilliant long-term wealth.
