Panic selling and buying

sidneyyoungblood

Not really a savings question but how to handle Panic selling / buying ..  I know the best option is to log in a couple of times of year but really hard when my phone keeps throwing my news articles and share price due to my past searches . 

Last week after reading all the negative press about AI seeing decided to lock in some gains on a 6x stock ( palantir ) after it fell 18% from its ath ,  sold £20k and left £3k in which was the original investment..

It was not skill but pure luck to stumble on the share in the first place as it was a batch of high risk shares I bought 4 years ago most which have collapsed and the 20k sale covered their loses ..

Problem is the next day the share price increased and I regretted selling and was tempted to buy back in again at a higher price ( plus the original the selling costs which was £200 ) so £600 extra ...

Now I have 20k sitting in the  ISA account doing nothing , I am aware that shares price increase is not guarantee but as I once held a large position ( for me ) keeps playing on my mind if it 3x again in the next few years I will be gutted.. gambling i know ..

I try to turn my mind off it but it is on my google feed so keeps popping up , ...

I try to look at the positives but always get drawn back , at one point the share was round 25% of my portfolio ..

Maybe it is my personality but was wondering how do you handle it when a share you once I owned and sold not because you needed the money but panicked ?

eskbanker

The usual guidance on here is to treat investing as a long term activity, generally buy and hold in a fairly passive manner, and ignore any short term noise.

There are undoubtedly folk who can and do succeed in actively managing a share portfolio, but if you're more in that camp then you would need to pay attention not just to generic market conditions but the fundamentals of the companies concerned.

For either model, being able to accept losses and suboptimal decisions is crucial - nobody can sustainably buy right at the bottom and sell right at the top - so always best not to beat yourself up about things that are only evident with hindsight....

Do you actually have a strategy?

Albermarle

Most of the investors on this forum ( not all) do not hold individual shares, and in the main are long term 'buy and hold' investors of funds of various sorts.
So not sure how many meaningful answers you will get, apart from advice to diversify and think more long term.
Plus maybe turn off your google feeds !

Eyeful

1. From what you post, you are your own worst enemy. 

2. You buy a single shares, which is very high risk, then you worry because of the news and then jump ship.
You are in well above your risk level.
I expect you will end up broke and a nervous wreak if you carry on this way.
Either stay in savings accounts or learn to invest.

3. You are not investing but speculating (also called trading) which again is very high risk and has extremely high failure rate.

4. Investing means leaving money in the market untouched for at least 10 years if not longer.
The odds of your winning are very high (but is not guaranteed)

5. You can make investing as simple or as complicated as you like.

6. Simple Investing boils down to this
(a) Have an emergency savings account to cover at least 6 to 12 months of household bills and car/boiler break downs.
(b) First watch this: https://www.kroijer.com/
(c) Then read these:

 https://monevator.com/passive-fund-of-funds-the-rivals/
https://monevator.com/best-global-tracker-funds/

(d) Simple Investing should be as exciting as watching paint dry.
You can ignore all the market noise (which you are not doing now) and just look at your investment once or twice a year.

wmb194

sidneyyoungblood said:

Not really a savings question but how to handle Panic selling / buying ..  I know the best option is to log in a couple of times of year but really hard when my phone keeps throwing my news articles and share price due to my past searches . 

Last week after reading all the negative press about AI seeing decided to lock in some gains on a 6x stock ( palantir ) after it fell 18% from its ath ,  sold £20k and left £3k in which was the original investment..

It was not skill but pure luck to stumble on the share in the first place as it was a batch of high risk shares I bought 4 years ago most which have collapsed and the 20k sale covered their loses ..

Problem is the next day the share price increased and I regretted selling and was tempted to buy back in again at a higher price ( plus the original the selling costs which was £200 ) so £600 extra ...

Now I have 20k sitting in the  ISA account doing nothing , I am aware that shares price increase is not guarantee but as I once held a large position ( for me ) keeps playing on my mind if it 3x again in the next few years I will be gutted.. gambling i know ..

I try to turn my mind off it but it is on my google feed so keeps popping up , ...

I try to look at the positives but always get drawn back , at one point the share was round 25% of my portfolio ..

Maybe it is my personality but was wondering how do you handle it when a share you once I owned and sold not because you needed the money but panicked ?

"Now I have 20k sitting in the  ISA account doing nothing..." Why is it doing nothing? With e.g., Trading212, CMC Invest and IG Invest it would be earning 4% whilst you decide what to do with it.

As to the rest, that's the nature of investing in the shares of individual companies. It's a good idea to have a plan, manage your position sizes, avoid FOMO and not to get too greedy.

LHW99

I know the best option is to log in a couple of times of year but really hard when my phone keeps throwing my news articles and share price due to my past searches

So you know what you should do.

Remind yourself that these news articles are basically clickbait, and most likely to be someone's opinion, not actual data. There are settings on most browsers that let you turn off targeted ads, which should make what you see more random and (maybe) a bit easier to ignore.

Linton

I avoid panic by two strategies, one mental and the other in the way investments are structured ...

1) I am convinced with 100% certainty that future prices are unknown.  But in the long term I am also convinced with 100% certainty that prices overall will increase. Therefore selling growth investments after prices fall makes no sense.  It is too late and does not put one in an better position. Rather it makes matters worse as it ensures that one is out of the market for a while and therefore not gaining from the long term rise.

2) Investments are configured such that any short/medium term fall in prices has no impact whatsoever on being able to maintain ones lifestyle. Hence again there is no advantage from selling growth investments in a panic - there is nothing to worry about.

Altior

Panic buying seems wholly unlikely in the investing space. I've never experienced it. I have experienced being blinded by a bubble. Namely the .com one. Arguably it was justified in the extreme long run, as I saw (like many) how the internet was going to change life as we knew it. It did, and the daq is now a multiple of the peak of the .com bubble, decades later (I was buying a daq tracker at the time). But I did bail at a loss. Investing lesson number one for me, never sell due to a falling market.

It leads on to my overarching point, since then I've only seen panic selling as an opportunity. The issue is that it has been so infrequent! I do invest in single shares and ITs, and have sold, but I never sell due to a falling price, only to realise gains. I can't wait to purchase index trackers again, but only after a panic. 

Vitor

IMHO you're doing the right thing by taking good profits off the table while keeping some exposure to benefit from an upside but not get wiped out on the downside. I don't begrudge leaving 5% for the other guy.

I've taken profits in BTC, gold and a fund which was heavily exposed to the 'Mag 7' but keeping 15%-25% still invested. 

The OP's reaction isn’t unusual, but it tells you something valuable: you’re more sensitive to volatility and regret than you perhaps assumed. The remedy is not to become emotionless; it’s to build habits and portfolio structures that don’t constantly trigger those emotions in the first place.

Eyeful

Just out of interest:

1.Where did you find out about the single shares you did invest in?
(a) Facebook (b) Suggested by some YouTuber (c) Your Google fed (d) TV or Radio. 

2. Before you bought a share did you bother to look at any of its fundamentals at all?
For instance things like its (a) PER (b) the amount of debt the company holds (c) Quick Ratio

phlebas192

I don't really get "panic buying" either. Probably FOMO is more appropriate.

I think the most valuable lesson I've learnt is that before buying a stock to write down both the reasons for buying it and the criteria which would lead me to sell it. Actually following through if those sale criteria are met is another matter! But it does give you something concrete to refer to. 

It's also important to have a defined, written strategy. Why are you buying this sort of stock? What criteria makes a stock attractive to you? What sort of stock should you never buy however much FOMO might tempt you? What's your general approach to when to sell?

Ultimately, anyone who invests in individual shares for long enough will have a "the one that got away" story. But those are about as useful to you and as boring to anyone else as fishermens' tales.