Stock markets around the world have been in turmoil. The fear is that the crisis in the US housing market could undermine the global economy.

Last Thursday, the FTSE 100 - the index of the UK's largest publicly quoted companies - lost over 4% of its value.

It looks bad. Shares go up is good. Shares go down is bad. At least that’s the impression. But neither need be unpleasant on their own. The FTSE remains a sound investment.

On August 20 2006, the FTSE stood at 5,906.10. It is now just above 6,100. Nothing spectacular there. And in August 2005, the FTSE stood at 5,296.90.

Over two years, your money, if linked to the index, would have risen by over 15 per cent. Over the same period, you’d have got 4.5% to 5.5 per cent in a decent building society account.

It’s just that at the end of June 2007, the FTSE stood at 6,607.90. Clearly that was the time to sell. The market had peaked.

In simple terms, share investor aim to buy cheap and sell dear. June was the time to sell.

And many did. As the Times reports, small punters sold a net £5.9 billion-worth of shares ahead of the dip.

And those that did invest bought safer shares that weather the storm, shares that experience less volatility. They bought shares in drink companies, food and tobacco – the mainstays of (my) life.

And we learn that since the start of December last, small stockholders have sold £8.9 billion of shares and bought just £2.9billion.

Money is on the move away from shares. And where to? Why, places of safey and reduced volatility – the bank.

Prices [via Yahoo],

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