What does a fund manager do when the stock market is crashing?
This is an intriguing question for us amateur investors and one that fund manager Georgina Brittain answered candidly in my recent Investing Show interview with her. Avoiding panicking is the obvious move, the manager of the JP Morgan UK Smaller companies trust and other funds said, because by the time you do its too late. Too late to sell: Investors are warned against ditching shares when markets tumble by 40%, as the FTSE 100 did last year, but how many are brave enough to buy  That was what she told her team, who turned to her decades of experience in investing as markets nosedived in the Covid crash of February and March last year. If you were really, really smart you panicked in January, you sold a lot of these things and then you bought them back in March, Georgina said. That was not a Mystic Meg move that she or her team managed to make. Of course, there may have been some smart investors who did spot the worrying coronavirus signs emerging out of China in January 2020 and bailed out, but they will be few and far between. For the rest of us, last years crash was one of those gut-wrenchingly relentless plunges that can chip double-digit percentages off your investment portfolios value each week, or even each day. If weve done our homework or successfully ridden out some storms before, we know not to panic, however great the temptation may be. But there is a flipside to any crash  and that is the buying opportunity as the market goes on sale. 'It's incredibly tough, said Georgina. I have managed money for almost 25 years. You think youve seen it all. You know that at times its stressful or very stressful. Last year was off the clock, is the only way to describe it in terms of the stress.  Mentally, intellectually, you know this is the right thing to do but on the day it feels pretty silly. And especially because then the next day shares are down even more  Yet, she said, that you have to steel yourself against that and have faith that buying good companies when their price is down will pay off. She said: Mentally, intellectually, you know this is the right thing to do  well youre very confident it will prove to be the right thing to be done  but on the day it feels pretty silly. 'And especially because then the next day shares are down even more and you think hmm. It is a test of really understanding your companies. Understanding the fundamental drivers of each of the companies we invest in.  Georgina added: You have to really push yourself and just keep focussing back on the fundamentals of why you own these companies, why you want to own them and why you think they are long-term winners. Sounds easy doesnt it, but my goodness it was hard.  Shes right, it is hard. I know this because I only got my strategy half right as the crash hit. I did my not panicking thing and I even did a bit of buying, but I didnt fill my boots as I had always promised myself that I would. Id say that I have been investing properly for about a dozen years  prior to that Id dabbled in a few things here and there but not taken it too seriously. That means I started in earnest after the financial crisis crash, but unfortunately not close enough to it to catch the rebound. Ever since, I have always told myself that the next time the market fell 30 per cent, I was buying as much as I possibly could of quality stuff that had tumbled in value. Thats based on the fact that I know how rare it is for the stock market to crash 30 per cent  its a once a decade or more-type thing  that markets always over-react, and that if you are patient and think long-term, its highly likely buying will pay off. And so, last March I watched the market drop by my magic number  and then keep going  but I didnt properly pull the trigger. I can pinpoint my problem in not doing what I knew I should: the speed, strength and illogical nature of the rebound. Led by the US tech stars, shares started bouncing again in late March, just as the UK and major western economies went into unprecedented lockdowns. Like many I thought: This cant be it. This cant last. Shares will dive again.  Some did, of course, but a lot of good stuff has powered ahead since  and I missed my opportunity to buy when it was on a big discount. As with many investors, the question I now ask myself is: What happens next and with things looking so frothy, have we seen the best of the rebound?  I dont know the answer to that, but Im willing to back the idea that a strong consumer recovery means some companies have plenty of headroom for further gains. I just wish Id bought them a year ago, at 40 or 50 per cent off.