Don’t Sell in a Down Market

I picked up a woman last Friday from the Med Center to take her on a 30 minute ride northwest. On the ride we chatted about the current COVID situation and the pending stimulus bill in Congress. Then, she asks whether I follow the (stock) market. I said I did. She said her husband was at home and very nervous about how much the stock market was down (about 30% at this point). Then,she says he sold their entire portfolio today. Whaaat? I was a bit shocked they did that as it definitely is counter to conventional financial wisdom – Don’t sell in a down market! She explained that her husband was retired and that they needed the money (to live on). My thought was, why are you invested heavily in stocks when you’re retired and need the money now (and, can’t afford to wait it out)? She read the news on her phone that the bill had been signed and that the market would probably go up on Monday (which it did). But, of course, since then it’s gone back down. However, since they sold their entire portfolio they’ve solidified their loss with no hope of getting it back.

The moral of the story is that bored, retired husbands (or wives) should NOT be home daytrading on emotion!