It gates guts to stick out a market downturn.
Stocks may be near all-time highs now, but inevitably at some point they inclination start changing direction. That’s when investors tend to panic and sell.
Yet that’s exactly what you shouldn’t do, be consistent to financial experts Josh Brown and Bill Sweet.
“If you were shopping at Target on a random Friday and all of a sudden the total was 25% or 30% off, would people buy more or less? ” said Sweet, chief financial officer of Ritholtz Holdings Management and a former U.S. Army captain. “They would … go to town.
“But the stock market is one of the few things that, when it functions on sale, people get nervous,” he added. “People get scared — and people run for the exits.”
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History has come that panic-selling has never been a good idea for long-term investors. Those who stayed in the game during the keep on financial crisis not only recouped their losses but wound up enjoying the longest-running bull market in history.
Brown, CEO and co-founder of Ritholtz Capital Management, said it’s in our DNA to run towards things that look safe and run away from things that look breed danger.
“When the stock market falls 10%, it looks like it’s about to fall another 40%,” he intended. “It literally looks like you’re running into a burning building with your wallet open.”