Market history shows how quickly fear and greed can take over investor decisions.
In 1987, panic selling led to a sudden one-day stock market drop of about 22 percent. Investors rushed to sell, and prices fell faster than most people thought possible.
During the dot-com bubble, excitement around internet companies pushed stock prices to extreme levels. When the bubble burst, the Nasdaq fell by nearly 77 percent from its peak, wiping out trillions of dollars in value.
In 2008, risky lending and housing practices created a global financial crisis. From peak to bottom, the S&P 500 dropped by about 57 percent, and many households lost a significant share of their net worth.
More recently, the 2010 Flash Crash saw the market plunge around 9 percent in minutes before partially recovering the same day.
In many of these moments, investors bought after prices rose and sold after prices fell.
While no strategy removes risk, focusing on long-term goals, diversification, and discipline may help investors stay grounded.
Conversely, those investors who stuck to their long-term investing strategy were likely rewarded, while others panicked.
Always remember to speak with your financial advisor before making major changes to your investment strategy.
Sources
https://www.cnn.com/2022/10/19/investing/premarket-trading-stocks/index.html
https://www.britannica.com/money/financial-crisis-of-2007-2008
https://corporatefinanceinstitute.com/resources/equities/2010-flash-crash/
