The stock market has further to fall

According to a poll of investors by money website Fool.co.uk, the stock market still has further to fall. Three out of four investors (76%) think the market has yet to bottom, and could drop further.

During October 2008, the FTSE 100 index fell as much 17%. The stock market plunge in October came hot on the heels of a 13% drop in September.

The October drop is by no means one of the biggest declines in a single month. In October 1987, the benchmark index fell 26%. That said, the October crash is without question one of the largest declines in terms of points in one calendar month. It fell 805 points.

On the face of it, October's performance looks disastrous, but the reality is nowhere near as gloomy. Most of us invest regularly in shares, and by doing so, we average out the money we spend on the shares.

By investing little and often we get more shares for every pound we spend when the stock market is low, but fewer shares when the market is high. Consequently, occasional downward lurches in the stock market are a boon for long-term investors.

David Kuo, Head of Personal Finance at Fool.co.uk says: "The months of October and November could quickly develop a bad reputation for market crashes. And on the face of it, their performance this year has done nothing to enhance their reputation. But it's easy to react to recent events.

"Hardly anyone ever sinks their life savings at the top of the market never to buy shares again. And by making steady, regular investments in shares, we actually benefit when shares drop every now and again.

"Investing in the stock market is a marathon, not a sprint. Furthermore, investing regularly helps us sidestep the temptation of predicting the right moment to buy shares, which we will probably get wrong more often than not anyway."