31 December 1999 proved to be the height of the technology bubble and markets sold off until they hit lows of 3,601. Investors have generally had a good run since, with the FTSE 100 hitting a peak of 7877 in May of this year.

Nevertheless, expert investors believe that we may have to get used to greater volatility. David Jane, manager of Miton’s multi-asset fund range said the age of uncertainty is back: “For many years financial markets have had a very benign backdrop. The era of QE put a floor under bond markets, forward guidance gave certainty over future US interest rates and we had a relatively predictable political order. Combining this with a growing economy and ultra-cheap money, may have given rise to a huge degree of complacency in financial markets, or irrational exuberance as it was once termed.”

He said this era has now ended with ‘cynics in the driving seat once again’. He says that he prefers areas of the stock market supported by hard assets and cash flow, rather than those areas with more aggressive valuations.

However, it’s not all bad news for investors. Laith Khalaf, senior investment manager at Hargreaves Lansdown, pointed out that investors have still made a near-120% return from stock markets, even if they bought at the peak of the FTSE 100 in 1999. “The headline FTSE 100 index ignores dividends paid by UK companies, which are a huge source of the total return payable to investors. The index also fails to take account of medium and smaller companies, which have performance significantly better than the big blue chips since 2000.”

Khalaf added that while the UK market could fall further from here, valuations on the UK stock market look close to their historical average: “Neither Black Friday cheap, not dotcom expensive. However, it’s unlikely to pick up significantly until there’s greater clarity on the UK’s withdrawal from the EU, meanwhile US trade policy also continues to undermine confidence in global markets.”

Russ Mould, AJ Bell investment director says that investors are now left to decide whether this is a chance to buy on this big dip in the UK stock market. He says it’s difficult to know what could be the catalyst to persuade investors to revisit UK stocks once more: “Even if they are unloved, have underperformed and could be undervalued, you could have said the same a year ago, to no particular effect, as it turned out….Some – any – visibility on what Brexit will look like and what it may mean could be the answer. Once investors know what they are dealing with, whatever it may be, then they have a chance to rationally assess earnings and dividend forecasts and thus valuations.

“As such, dip-buyers may have to be brave and patient – but then the darkest hour always comes before the dawn.”