Locking In the Loss

Here's what makes panic selling so destructive: you take a temporary loss and turn it into a permanent one. The market has recovered from every major crash in its history — 1929, 1987, 2008, and the 2020 COVID shock. A paper loss only becomes real the moment you sell.

After a bear market, it has historically taken the S&P 500 a couple of years on average to climb back to its old high. But the average panic seller is hit twice: they sell low, then buy back late, missing the sharpest part of the rebound.