Investing term

What is Panic selling?

Dumping investments into a drawdown because the pain of watching feels worse than the pain of missing the rebound.

Panic selling is dumping investments during a sharp decline because watching the losses grow feels unbearable. It locks in losses that were only on paper and, worse, usually happens near the bottom — right before the rebound. It's the single most destructive thing a long-term investor can do, and the reason a written plan and pre-set rules exist.

For example

Stocks fall 25% in weeks, the fear becomes too much, and you sell everything at the lows — just before the market recovers without you.

Panic selling is taught hands-on in Stage 2 — Why Investing Matters (And When It Doesn't).

See the lesson →

Related terms

Asset classA broad category of investment with similar behavior. Stocks, bonds, cash, real estate, commodities.Behavior gapThe difference between a fund's reported return and what its investors actually earned — usually worse.Dollar-cost averagingInvesting a fixed amount on a fixed schedule, regardless of market level.FOMO buyingFear of missing out — piling into something after it has already run, because everyone else seems to be winning.
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