Market sell-off? How NOT to handle big stock declines

Fri, Aug 30, 2024, 1:00 PM

Though Gen Z would have been too young, many remember Black Money in '87. The market crashed causing mass-panic and sell-offs. But the hardest earned lesson in the aftermath had nothing to do with avoiding investments; it was actually patience, since the market recovered fairly quickly. Hosts of Yahoo Finance's new show Living Not So Fabulously, David & John Auten-Schneider, got to hear a first-hand account of the harrowing day from Jane Sasseen, founding executive director of the McGraw Center for Business Journalism. Sasseen explained that had she not panic-sold half of her investments, she wouldn't have taken a loss because markets always go up and down. In reflecting on her experience, she said, "Finally at some point I realized, oh, this other half is doing well, maybe it's time to put the money back and I would have been much better off just to leave it and forget about it."

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00:00 Speaker A

It was early in my journalism career. I was um, this was uh you know, what was it? Black Monday in '87 'cause you know, 'cause I'm old. Um, so many of you listening to this probably have never heard of this, but it was like, I think it was actually the biggest one-day loss in the market, even beyond like the Great Depression. Um, so it was like '87, and I was freelancing, I was living in Europe and freelancing, and I had had I had inherited some money, and I had a small amount of money that I had put in the market. So I get all these calls from people 'cause I was started in business journalism, and people were like, you know, you got to do stories on, you know, how the markets in Europe's, how the European markets are reacting. Meanwhile, I had just put this tiny amount of money that I had inherited, which was allowing me to live there and freelance with no money, into the market. And I spent all day watching it collapse. And I was, like everybody else, I was frozen. I like I had no idea what to do. So the end of the day, I kind of went home and like, "I can't stand this. What if I lose everything?" And I did I think it's kind of a stupid thing that lots of people do. It's like, "I'll leave half in, and take half out." And then sort of, I'm covered either way. So, pulled half of whatever it was out. You know, went about doing whatever, you know, work, and writing stories and everything. And, as happens all the time, you know, eventually, the market recovered. And it actually didn't take that long, if I recall, to recover. Meanwhile, I was frozen. And I think that's what people do. You get frozen 'cause you don't know, you know, 'cause you can't predict. Right. And so like the half of the money that I'd taken out, because I had to make an active decision to put it back in, it sat there for, you know, I don't remember how long now, but, you know, finally at some point I realized, "Oh, this other half is doing well. Maybe it's time to put the money back." And I would've been much better off just to leave it and forget about it. And I think people forget all the time that, you know, markets do they go up, they go down. And, you know, and anybody who thinks they can time it, you know, as an individual maybe professionals can, I don't really think they can either, but certainly as an individual, you can't time it. So you just have to kind of decide I don't need this money for whatever your horizon is. You know, and especially, you know, at that point, I was, I think, 28. It's like, put the money in and forget about it. You know, I don't need this money. This is my retirement money. I don't need it for the next 40 years. I shouldn't think about it. And you know, and don't look at it, you know, weekly or monthly or daily. It's I think that's the biggest mistake people make.