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Last updated on April 10th, 2025 at 09:15 am
Editor’s Note: This post was originally published in August 2022 and has been updated for improved clarity, updated insights, and relevance to our evolving mission.
I know it’s attempting to sell an investment that has lost money, but this could cause you to lose even more money in the long run. Instead, consider selling the investments only if the funds are needed immediately. This will allow you to keep your gains while reducing your losses. Let’s discuss three reasons you shouldn’t panic sell!
1. Don’t Sell If The Economy Is Doing Poorly!
Avoid panicking and selling your investments if you’re worried about the economy. There are two reasons for this.
First, the U.S. economy will continue growing in the long term, so even though it may be turbulent in the short term, it (most likely) won’t self-destruct! And if it does, believe me, we would have bigger fish to fry as the country would face an insanely catastrophic event.
Second, if the stock market crashes, it will correct itself based on its history. This means that, although the stock market’s prices fall, it is bound to recover!
As long as your investment portfolio is diverse, using ETFs, Mutual Funds, or multiple stocks from different industries and sectors, a little turbulence is okay! The reason is that well-diversified portfolios likely consist of cyclical and countercyclical investments.
A cyclical investment typically performs when the economy is expanding (doing well). A countercyclical investment performs well when the economy is contracting (not doing well).
The Stock Market has endured many downturns since the 1950s and has returned to greater heights each time. The chart below drives home the point that when investing long term, the need to panic and sell when the market downturns serves no benefit. If anything, buy more and take advantage of the lower-priced market!
✅ Call to Action:
Stay invested through market turbulence. If you’re feeling uncertain, review your portfolio diversification today and ensure you’re spread across sectors using ETFs or mutual funds. Not sure how? Look into index funds like VTI or SCHB as a starting point.
📈 Pro tip: A well-diversified portfolio can weather market downturns with far less stress.
2. It is impossible to Time The Financial Markets!
If you try to time the market, you will likely lose money. This is because the stock market moves based on supply and demand. In other words, if investors believe that a particular asset’s price will rise, they will buy more.
Conversely, if investors believe that an investment security will fall in value, they will sell more of it. As such, it is impossible to predict when the market will move.
To reiterate how impossible it is to time the financial markets, a Business Insider report, you should know that only 10% of active investment managers actually beat the stock market’s natural performance over the last 15 years!!!
An active investor buys and sells investments based on a developed investment strategy. The opposite is a passive investor, who typically buys and then holds investments while the financial markets run their course.
Knowing this fact, I think it would be absolutely absurd for the average individual investor with little investment knowledge to believe they could consistently beat the financial market.
The 90% of active investment managers that fail comprise some of the best educated and well-experienced. Wall Street firms have the best investment technology at their fingertips, and not even they can guarantee success!
Before you decide to panic sell your investments on a gut feeling, remember that no one knows when the best time is to exit and enter the market again!!!
✅ Call to Action:
Instead of timing the market, set up a simple investing strategy like dollar-cost averaging. Automate regular contributions and let your money grow over time. Take a moment to revisit your long-term goals and align your investments accordingly.
📌 Remember: Consistency beats timing, every time.
3. Don’t Let Fear Rule Your Decision to Panic Sell!
The financial markets can be extremely volatile. Millions of investors are trying to predict the future, so the stock market moves up and down based on people’s feelings about the economy, interest rates, inflation, and other factors.
If you and I were to base our expectations of the financial markets on what we see in the media, we would be in a world of hurt. There will always be hype in the media. The hype could be from a raging meme stock, a tumbling cryptocurrency, or a wild political environment.
Don’t let these fears force you to panic sell your investments (or buy into ones you know nothing about)!
Even if you believe the information comes from a credible source, such as a seasoned economist, think twice before acting. Economists tend to use plenty of assumptions in their models to conclude where the economy is headed.
As you can probably imagine, it becomes less likely to be accurate when using many assumptions to reach a conclusion. The World Economics Association even made an article stating why almost all econometric models are wrong.
This is not to say we shouldn’t hear these predictions, but we shouldn’t make knee-jerk investment decisions based on the fear of one source alone. As always, I highly encourage you to do your own research before making any investment decisions.
✅ Call to Action:
Whenever fear strikes, pause and ask yourself: “Am I reacting emotionally or strategically?”
Better yet, create a written investment plan that outlines your goals, timeline, and risk tolerance. This gives you clarity when emotions are running high.
🧠 Need help crafting one? Check out online tools from Vanguard, Fidelity, or Charles Schwab to get started.
To sum things up!
A downturn in the economy or financial market is not the world’s end. The U.S. has repeatedly bounced back from economic downturns and financial market crashes. This is not a good reason to panic sell your investments, especially if you are in it for the long haul and have a diverse portfolio.
Panic selling to beat everyone else before the markets deteriorate is a bad idea! No one can predict when the markets will crash. This is a for sure way to lose some money, just stay the course and ride out the turbulence.
Don’t let fear consume you to sell investments on a whim! I know that dealing with money can cause plenty of emotions. News outlets, social media, and the “Finance Gurus” will always project their thoughts, but don’t let this cause you to make an irrational decision. Persevere, my friend, let rationality prevail; this too, shall pass.
✅ Call to Action:
Make a promise to yourself today: Stay the course, trust the process, and avoid rash decisions.
Create a checklist now of what you’ll do during the next market drop—so you’re ready to act wisely, not emotionally.
🙋♂️ Let’s End with a Challenge:
What will YOU do now to prevent panic selling during market turbulence?
Write it down. Better yet, share your plan in the comments or with a friend—accountability matters!
🔄 From Traditional Markets to Digital Assets
While traditional investments like stocks, ETFs, and mutual funds have been foundational to building wealth, the rise of decentralized finance (DeFi) is opening new pathways for individuals to access financial markets—without intermediaries.
In upcoming WealthImpact Journal posts, we’ll explore how blockchain-powered tools offer transparency, 24/7 access, and borderless investing opportunities. Think of DeFi not as a replacement, but as a bold new parallel track with its own risks and rewards.
🎉 Launching Soon: WealthImpact DeFi Series Learn how to invest, earn yield, and stay safe in the decentralized financial world. 👉 Join the waitlist or subscribe for updates!
