From a broker's point of view, a fall in the market is all part of the cycle. We're used to it.
Life for us has always been feast or famine and those that have been around know that sometimes the market pays out and sometimes it doesn't and when it doesn't and clients don't make money, the volumes dwindle and activity dies down until they start making money again. Perfectly normal.
So what do you do when the market isn't going up? Here are some more typical reactions, most of them mistakes.
■Average down, otherwise known as buying into a falling market.
■Shut their eyes and declare their faith in the long term. Set and forget.
■Suddenly convert to "value" investing, changing their time horizon from 20 minutes to 20 years.
■Or throw in the towel on investing in favour of trading cute short-term movements in an ever more volatile and unpredictable market.
■Or as a trader, trade even more to compensate for their losses and their lack of gains.
■Start shorting stocks through leveraged derivatives on line.
■Get their credit cards out and buy an instant fix, like an $8000 course in option trading.
■Declare they are "no good" at investing and exit the market forever.
■Declare every "up" day as the beginning of a new long-term bull market.
■Continue to be optimistic. Being 100 per cent optimistic sells more than being 99 per cent optimistic.
■Produce more trading ideas and if they're ignored call them "conviction" ideas. Keep that commission rolling.
■Emphasise that the market always goes up, and say "in the long term" a lot.
■Final resort, find a new job, give up on the industry at the bottom.
More appropriate reactions on the other hand might include:
■Trade less. When I was working at Nomura in London in the 1980s and the market collapsed, the head of the trading desk sent four principal traders (traded with the company's money) on holiday for a month to stop them trading. He told them to go and play golf. They did. He saved the firm a fortune.
There are times in the market when you are better off spending your money on beer and holidays.
Play golf for a month. It'll be cheaper than pushing water uphill.
■Buy high-income stocks. A natural reaction in a bear market is to forgo the concept of making capital gains and instead focus on defensive income stocks. But cashing out is the only really defensive stock in a falling market, in "defensive" stocks you just lose less and in a market in which the NAB can go up and down more than its yield 14 times in 12 months, the yield is irrelevant.
For those who think income is everything and income stocks are "quality" or "defensive", can I just point out that many are high-yielding because the dividend forecasts are wrong and will never be paid. It's called the yield trap. When it comes to yield, less is often more and, remember, any stock yielding more than 10 per cent, generally doesn't.
■Beware a really big fall. Even the income investors, keep your eyes open and set some wide stop losses and stick to them.
■Make your own decisions. Only a few professionals will ever advise you to sell. The job of protecting your net worth from the downside is yours. The industry is here to get you in not let you out.
■Adjust expectations. "Expectations met" are the root of all happiness. If you want to be happy in a falling market you might just have to bite the bullet and shade your expectations, and you'll need to clip the expectations of your dependants as well, sit them down, tell them there are no more iPads about to magically appear.
■Change your routine. The head of equities at one major broking firm was famous for once going to the cinema in the afternoon in a bear market. And why not? Apart from avoiding losses the main game in a falling market is to amuse yourself somewhere warm until things get better.