There are times when our investments appear to be going down in flames. Twice in the last 9 months, the S&P 500 dropped about 10 percent in a matter of weeks.
You were financially independent a month ago, and now you’re not. You need to stop the hemorrhaging. You need to do something!
Selling in a down market is a great way to lock in your losses. Don’t do it. Ride the wave down and back up. Don’t just do something. Stand there. Be a rock.
When the stock market drops, and it drops at least 10% at some point most years, standing there, i.e. doing nothing, may not be the best strategy.
When your asset allocation gets out of whack as it tends to do in down markets, you can sell recent winners to buy recent losers, restoring your desired asset allocation.