There Will Always Be Reasons to Sell

I think we’ve all been there, at least those of us who’ve been investing for a while. First-time investors? They’ve never seen anything like this. The market’s dropping, uncertainty is thick in the air, my portfolio's in red, and I can feel a light sweat building because I don’t know what’s coming next. My mind races - should I do something? Should I react now?

Eventually, the person panics and sells.

Then, a few years later, when they look back, they can't believe they made such an obvious mistake. It all seemed so logical at the time, almost inevitable, "Save what you can." But the truth is, they let their emotions take over, and rarely make decisions that are in the best interests of long-term investors.

People are emotional beings - and the markets know how to play that card

Honestly, as much as we like to believe we're always calm and level-headed, the truth is often very different. We're humans, not robots. When the market starts to drop, and your portfolio is shrinking right in front of you – rationality starts slipping away, and emotions take over.

You know that feeling, right? That knot in your stomach, that urges you to keep refreshing your app, expecting another piece of bad news every time? You see headlines like "Biggest drop since the financial crisis," "Investors in panic," "Economy on the brink of a collapse"… And every one of those headlines seems to push you toward action. Suddenly, fear sets in, and panic takes hold.

To put it into perspective, remember March 9, 2020? The New York Times ran with the headline: “Stock Market Suffers Worst Drop Since 2008” — a brutal day when the S&P 500 fell by over 7%, triggered by COVID-19 fears and an oil price war. Or take April 22, 2022 — The Washington Post published: “Dow sinks 900 points as S&P 500, Nasdaq post worst month since March 2020”, after the U.S. reported the highest inflation reading since 1981.

Seeing those kinds of headlines — with big red numbers and urgent words like “crisis,” “collapse,” and “panic” — it’s hard not to react. While those headlines carry urgency, we now know how those stories ended (the market recovered).

Then, out of nowhere, a different kind of greed shows up – not the greed for more, but the kind that says, “Save whatever you can! Don’t lose everything!” And just when you think you’re getting your bearings, FOMO creeps in – that gnawing fear that everyone else will react in time and you’ll be left behind.

All these emotions, combined, create the perfect storm. And the markets – or, more accurately, the people who shape the market narrative – the media, analysts, commentators – they know exactly how to exploit that. They’ll always give you a reason to act. A reason to react. And that’s why it’s so crucial to recognize that emotions aren’t just random distractions – they’re an integral part of the system.

Once you let emotions take the wheel, it’s easy to fall into a cycle of impulsive decisions that lead you exactly where you never wanted to be – selling at the absolute worst possible moment.

Does that sound familiar? If so, you're definitely not alone. Every investor has been there, and it’s nothing new.

This time it's different...

Like any minor market correction, a crisis always grabs the headlines, and that often pushes us to the edge of making a major decision. You feel this pressure to act. The news and forecasts make it seem like the perfect time to sell. It might even feel like the market is unfair and pulling out while you still can is the safest bet.

But here’s the reality: history shows us something completely different. There will always be something out there convincing us that now is the "perfect" time to sell—whether it’s bad news about a major company, political turmoil, or simply the feeling that you’ve lost enough and want to avoid further risk. 

That’s the nature of the market’s constantly feeding us new information and fresh reasons to be afraid. What’s often forgotten, though, is that these “perfect” moments, these “this time it’s different” moments, have come and gone before.

What hurts investors the most is selling out of fear, panic, or boredom. That’s not a strategy; it’s a reaction to discomfort. And the worst part? It usually happens just before the market rebounds.

So before making any decisions, ask yourself: "If I sell, why am I doing this? What do I hope to achieve? How am I going to use that money?" If you don’t have clear answers, it’s a sign that emotions are driving you, and emotions should never be the compass in investing.

Take recent history, for example. Remember the 2020 pandemic crisis? At the time, everyone was convinced that the world was on the brink of a disaster, that the virus would ravage the population as soon as people left their homes. But more than the virus itself, what investors feared the most was the absolute shutdown and closure of the world economy, the interruption of global trade, consumption grinding to a halt, and everything coming to a standstill.

Fear took over the market, and many sold their investments, thinking the market had hit rock bottom. But today, looking back, that moment seemed like a minor blip, and we now know it was an opportunity to buy, not sell.

Same thing with the trade war, it happened in 2019, it’s happening again now. And just like all the other so-called “big” news stories, it ends up being a footnote on the chart below. Markets aren’t perfect, and they definitely don’t move in straight lines, but they always find their way back.

Source: Ritholtz Wealth Management, Ycharts

What the data tells us

Look, I get it. We’re all human. When the markets drop, and you watch your portfolio take a hit day after day, it’s natural to think, “I need to do something.” And that “something” often ends up being selling.

But here’s the thing: it’s not the market crash itself, that’s the problem. Crashes are part of the deal. In fact, on average, the S&P 500 sees an intra-year drop of about 14% every single year. And that’s even in years when the market ends up positive. So yes, the market dips, but it recovers—almost every year.

Now, more severe crashes, those over 20%, the "bear markets," happen roughly every six years. So, it’s not a matter of if they’ll happen, but when. And guess what? It’s not a sign of something going wrong; it’s just a part of the cycle.

What actually hurts us isn’t the crash itself; it’s what we do in response to it. When fear kicks in and we sell, that’s when we miss the moments that make the difference. Let’s say you missed just 10 of the best days in the market over the past 20 years, your total return would have been cut in half. Just 10 days! That statistic speaks for itself.

Source: JP Morgan Asset Management

What’s even more interesting is that many of those best days come right after major market crashes. Why? Because the market reacts fast. Panic turns into optimism, and if you’re not there when the turnaround happens, you miss out.

Take the current Trade War example: in just one day, the S&P 500 soared nearly 10%. That’s the kind of gain you don’t want to be on the sidelines for.

The problem with trying to avoid crashes is that you’re often also avoiding the upside. In fact, 78 % of the best days in the stock market have occurred during bear markets or in the first two months of a bull market. The tricky part about timing the market is that you need to know when to sell and when to re-enter. But here’s the catch, statistics show that most people can’t get this right. Once you’re out, it’s tough to predict when the right time to get back in is.

Source: Ned Davis Research, Morningstar, and Hartford Funds, 1/25

History shows us that investors who panicked during crashes often didn’t make it through, and when you look back, most of those crashes were short-lived. The market always recovers, but the people who sell out of fear don’t.

That’s why I say it’s not the market drop that causes the real damage. It’s the panic-driven decision to get out when you should be staying calm. And honestly, that’s the hardest lesson any investor can learn.

How do you stay calm when everything looks bleak?

I completely get it’s tough to stay composed when everything around us seems to be falling apart. Honestly, it would be hard for anyone to say they’re not feeling some level of stress when the markets are down and all anyone is talking about are the worst-case scenarios. Those are the moments when our hearts are racing, and unfortunately, they’re often when we make the biggest mistakes. But over time, I’ve learned a few things that help me stay calm under pressure.

The first thing I do is ask myself, “What’s my goal here? What am I really trying to achieve in the long run?” It’s easy to get swept up in the chaos of the moment and forget why we invested in the first place. We didn’t jump in to chase quick profits, but because we believe in the long-term potential of these companies or markets.

So, I start answering questions - clearly, specifically. For example: the pension I’ll receive in 30 years. Will stocks increase by then? Yes. By how much? Maybe 10 times. Do I need that money now? No. So I let it work.

This kind of clarity helps me stick to my plan. I encourage others to ask these same questions. Are you investing for retirement? For a child’s education? For freedom? Frame it specifically. Will markets go up over decades? History says yes. Will there be downturns? Of course. But do you need the money now? If not, why panic?

Next, I’ve set some personal rules for myself. I never make major decisions when I’m stressed. If I can’t think clearly, then I simply don’t make decisions. Sometimes that means taking a step back for 24 hours, a week, or even a few months, whatever it takes to let my mind settle and to view the situation with a clearer perspective.

Something else that’s really helped me is having a conversation with someone who isn’t emotionally attached to my portfolio. As investors, we often form a personal connection with our investments, but talking to someone outside that bubble gives me an objective view of things. It’s amazing how that fresh perspective can help cut through the noise.

If I feel that a change is necessary, it’s not panic - it’s part of the strategy. But I never act in the heat of the moment. I always make sure I’m calm and clear-headed before making any moves.

The key to weathering market storms is maintaining control and staying focused on the long-term. It sounds simple, but when the market dips, the real challenge is: Can I keep my cool and stay focused on the bigger picture?

Markets are unpredictable, but our behaviour doesn't have to be

Markets are unpredictable in the short term, always have been, always will be. But zoom out, and the story changes. Over the long run, the data speaks for itself. That’s just the truth, plain and simple. But here's the thing: while we can't control what the market does, we can control how we respond to it. And that, more often than not, is what separates the investors who win from the ones who lose.

You might be thinking, “Yeah, but what if the market never recovers?” Totally fair question. We've all had that moment where everything feels shaky, like the ground is moving under our feet. But if you zoom out and look at history, the biggest wins didn’t come from chasing every dip and spike. They came from patience, discipline, and sticking to a long-term plan.

The investors who really came out on top weren’t glued to the screen every day. They didn’t panic when things dropped. They understood that downturns are part of the ride—and that markets, for all their ups and downs, have always bounced back.

Want a wild stat? Fidelity once did a study and found that some of the best-performing accounts were from investors who… forgot about their accounts. Sounds crazy, right? But because they weren’t reacting, panicking, or making emotional decisions, their portfolios were just left to grow. No tinkering. No drama. Just time doing its thing.

So next time the market drops, and you feel that panic creeping in, ask yourself: “Am I following a plan, or just reacting out of fear?” If there’s no plan, maybe it's best to quiet everything around you, calm down... and let time do its thing.

I’ll leave you with a great quote from Morgan Housel “Every past market decline looks like an opportunity. Every future decline looks like a risk.” Let that sink in.