These Are the 6 Worst Times To Sell Your Stocks, According to Financial Advisors
Written by
Heather Taylor
Edited by
Molly Sullivan
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It’s not uncommon for investors to experience a moment during their investing journey where they contemplate whether to sell their stocks or hold onto them. More often than not, news of the stock market dropping or interest rates falling can create a bit of anxiety in investors. This anxiety may manifest into taking action to sell stocks, an impulse decision that typically hinders investors in the long run.
GOBankingRates spoke to three financial advisors about the worst times to sell. Keep reading for six instances where selling your stocks isn’t worth it.
1. When the Stock Market Drops
Joseph Eck, CFP and financial planner at Stage Ready Financial Planning, said a terrible time to sell your stocks is when the market drops. Often, investors will make this decision based on their emotions and sell to avoid future losses.
“If you are panic selling, you might put yourself in a position that you can’t recover from because you are no longer in your stock position when the market starts to recover,” Eck said.
2. Because the Stocks Are Down
Investors should be careful not to sell good stocks simply because they are down, said Hao Dang, CFA and investment strategist at Consilio Wealth Advisors. According to Dang, this is a sign of investors giving in to their emotions.
3. During a Large Sell-Off
Ed Mahaffy, president and senior portfolio manager at ClientFirst Wealth Management, said one of the worst times to sell your stocks is in a large sell-off where an investor might make decisions driven more on their emotions than a sober analysis.
“If you are fearful, you are certainly not alone,” Mahaffy said. “Mutual fund managers will receive liquidation notices, which exacerbate the selling at a time when the manager may in fact see great value in the market as well as bargains in certain individual names. Still, they are forced to sell to meet shareholder distributions.”
4. When Interest Rates Are Falling
Some investors may make the ill-fated decision to sell their stocks when interest rates stop rising and start falling. In this situation, Mahaffy said it creates a tailwind for stocks.
What if rates are falling because of an economic slowdown? Mahaffy said earnings may suffer, which offsets some or all of the benefit of lower interest rates.
5. Price Movements
Dang doesn’t recommend selling stock because of price movements. This is true whether the prices are going up or down.
“Investors potentially lose out on upside if they sell prematurely, even after a decent run up,” Dang said. “Good companies have the ability to grow and maintain their margins.”
6. After a Recent Good Performance
Don’t get in a rush to sell stocks if they’ve recently performed well in the market.
“I know everyone is sensitive to the next big correction, but stock market history suggests the market is up about 70% of the time,” Dang said. “Investors assume that the stock they own can’t go higher from here. Despite their assumptions, winning stocks tend to win longer than we anticipate.”
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