The Cost of Panic

When your portfolio drops 30% and you sell, you have not "cut your losses." You have locked them in permanently. An unrealized loss is just a number on a screen. A realized loss is money gone. The investors who lose are the ones who sell during the panic.

During the 2020 COVID crash, the S&P 500 dropped 34% in five weeks. Investors who sold locked in that loss. Those who held — or better yet, kept buying — saw full recovery within five months. Panic-selling is the single most expensive mistake an investor can make.