"Undoubtedly, far too many investors are quick to panic at the first signs of pain in the stock market. If you're already in a somewhat panicked or nervous state after a drop of just north of 3% in the S&P 500, you might be overinvested in risk-on securities, or perhaps you're listening to too many horrific forecasts of bears who've emerged in recent weeks."
"Undoubtedly, a 3-4% drop in the broad market isn't all too much to get into a panic over. But if you think about what could happen and the bearish theses of some of the folks who are subscribed to an "AI bubble" burst scenario, such a mild decline (it's more of a blip in the grander scheme of things, at least so far) might have you worried enough to sell off a few of your holdings."
Investors should avoid panic when market volatility rises, because modest declines like 3–4% are often short-term blips. Overreacting can force sales of quality holdings at attractive prices and increase long-term losses. Diversification, patience, and discipline help manage losing streaks and volatile periods. Widespread talk of an AI-driven bubble amplifies fear and can tempt investors away from long-term positions. Assessing risk exposure and maintaining a consistent strategy reduces the likelihood of costly emotional decisions. Remaining balanced and focused on long-term objectives generally produces better outcomes than reacting to short-term market noise.
Read at 24/7 Wall St.
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