Panic selling is also known as forced selling, panic buying, or panic trading. It occurs when investors sell their assets (stocks, bonds, etc.) in a panic, usually due to fear of loss. This can cause prices to drop sharply and may lead to a financial crisis.
Example of Panic Selling
The panic selling of 2008 was caused by the subprime mortgage crisis. Investors were worried about the stability of the housing market and sold their assets in a panic. This led to a sharp drop in prices and a financial crisis.
How to Avoid Panic Selling
There are a few things you can do to avoid panic selling. First, stay informed and don’t let your emotions get the best of you. Second, have a plan in place so you know what to do if the market starts to drop. Finally, remember that panic selling is often unwarranted and that you shouldn’t sell unless you’re absolutely sure it’s the right thing to do.