“To sell, or not to sell” – that is the question on the lips of millions of investors around the world as global markets dig deeper in the red. But when it comes to investing, you should never make spur of the moment decisions.
Things in the world of investing have definitely been better. Financial markets around the world have been dropping all year – right now the S&P 500 (SPX) is down 17% year-to-date (YTD), the ASX is faring slightly better only down 11%, while the total market value of cryptocurrency has plummeted over 37%.
Understandably, tensions are high, with a lot of retail investors wondering whether or not they should sell their assets – especially if asset prices are set to continue dropping in the coming months. So, the question remains, “to sell or not to sell?”
To answer this, DMARGE asked eToro’s Australian market analyst, Josh Gilbert what investors should do in the face of continued market decline.
Gilbert immediately kicked things off by saying that “panic” selling is never a good idea.
“It’s important that investors keep their emotions at bay and take a calculated approach when investing. All markets can be volatile, so it’s best to remain calm, regardless of whether the market is experiencing a bull or bear run,” Gilbert continued.
Speaking on whether or not investors should be selling with the current drawdown in prices across most markets, Gilbert made the case that these decisions depend on each investor’s long term goals.
“Unfortunately, there is no right or wrong answer to whether investors should be buying or selling, as it simply depends on an investor’s risk profile and personal strategy.”
When asked for his thoughts on cryptocurrency, Gilbert said: “It’s hard to see a future in finance without blockchain and crypto assets.”
When it comes to crypto, major players throughout the market are deploying a whole range of different strategies.
El Salvador’s President, Nayib Bukele doesn’t seem too concerned with the recent market insanity, buying up another US$15 million in Bitcoin while the rest of the market seemed to be panicked.
Anthony Sassano, a popular Ethereum advocate, replied with a meme that took a slight jab at Bukele’s “buy the dip” strategy (hinting that though you might think you’re buying the dip, you could actually be just buying the first dip of many).
Ultimately, regardless of whether you choose to “buy the dip”, or sell your assets at a loss, “panic selling” is never a good idea. Whenever an investor buys or sells an asset, whether it be in the traditional stock market or in crypto, it should never be a spur of the moment decision.
Short-term investors could be looking for “oversold” assets that have a chance of making a solid recovery in the coming months.
On the opposite side of the fence, long-term investors could be taking advantage of falling asset prices to grow their portfolio. After all, for 80% of all time since World War II, the American stock market has posted a positive 12-month total return.