Investing in a volatile stock market can make buying UK shares quite a daunting task. It can be quite frustrating to start deploying capital into promising-looking businesses only for the share price to then subsequently drop sharply.
Yet the mistake most novice investors often make is to then immediately start second-guessing their decision and hitting the Sell button.
There seems to be a lot of that happening right now, with the FTSE 100 swinging back and forth as the market processes the ongoing geopolitical uncertainty. So for an investor seeking to deploy £1,000 into UK shares today, what’s the best strategy to think about using?
Don’t fall into the loss-aversion trap
While it can be quite unpleasant to watch, just because a British stock’s taken a large hit doesn’t make it an automatic sell. In the short term, the stock market can be pretty unpredictable, with prices driven almost entirely by emotion rather than pragmatism.
However, it’s important to recognise what short-term volatility actually is – an opportunity.
When emotions are making all the decisions, the market can offer up some pretty exceptional bargains. Having said that, not all sold-off stocks are bargains. In some cases, some caution is warranted. But how does an investor determine whether or not a drop in a share price is a buying opportunity or a trap?
The answer lies within the underlying business. If a company’s encountered short-term challenges, but its long-term potential remains intact, then buying some shares could prove to be a lucrative move in the long run. However, if a more permanent problem emerges, then selling might indeed be the right course of action.
Either way, investors need to dig in and uncover what’s driving the share price down before thinking of putting any money to work.
Where to invest £1,000 in 2026?
The best stocks to buy in 2026 are different for every investor. After all, everyone has different objectives and risk tolerances. But for those nervous about a wider market drawdown, honing in on defensive UK shares could be the right move today.
That seems to be the advice coming from Goldman Sachs’ team of analysts which has flagged Halma (LSE:HLMA) as a top contender.
The business is a serial acquirer of smaller niche enterprises spanning the safety, environmental, and healthcare sectors.
Across its network of subsidiaries, it manufactures crucial things like fire detection systems, water sensors, and medical diagnostic equipment. But most importantly, demand for almost all of its products doesn’t change even during economic downturns.
This continuous influx of orders is how management’s been able to continuously grow dividends each year for almost 50 years in a row. And with long-term demand supported by continuous regulation, Halma looks nicely positioned to continue steadily compounding.
Of course, acquisition-based growth strategies can be tricky to pull off. Even with a bolt-on approach, acquiring businesses that fail to live up to performance expectations can destroy shareholder value rather than create it – a risk that investors will need to consider carefully.
Nevertheless, with such a phenomenal track record, Halma definitely stands out among other UK shares. And it’s why I think a closer look is definitely a good idea.
