The FTSE 250 is looking very cheap right now
Investors don’t want to invest in the FTSE 250 (or the UK stock market in general), so they sell up and head to where prices only seem to go up (mostly the US). This, of course, depresses the value of UK shares and the FTSE 250 falls even further. That further depresses the remaining UK investors, so they sell up and follow their peers to the US (or anywhere else that isn’t spelt “UK”).
And round and round it goes.
Eventually, even relatively unexcitable long-term investors sell up because they cannot take the pain of seeing their life savings dwindle away, apparently on an unstoppable decline towards zero.
And that's when markets usually, and unexpectedly, recover.
You can find out more about this topic in the related blog post:
Disclaimer: This content is for educational purposes only and it does not contain financial advice or recommendations to buy or sell any specific investment. Investments can go down as well as up, so you should always do your own research and speak to a regulated financial advisor if you need to.