Panic Selling - How to keep your cool

Investing can sometimes feel like riding a roller coaster — smooth and steady during calm, predictable periods, but unsettling when the market takes a dip. Even with a solid, well-structured plan, market ups and downs can stir anxiety. At the first sign of turbulence, many investors feel the urge to hit the panic button, selling their investments to prevent what they fear could be bigger losses.

This reaction is understandable. When markets drop, those declines can feel personal — even if they’re temporary and still within the risk level you chose at the outset. The challenge is that panic selling often turns short-term, recoverable dips into lasting setbacks, locking in losses that might otherwise have been recouped over time.

That’s why it’s important to take a breath before making big decisions. Instead of reacting emotionally, investors can benefit from the steady hand of an experienced guide. At Zurich, advisers provide clear, personalised support to help you navigate uncertainty with confidence.

Zurich’s professionally managed portfolios are built with market fluctuations in mind. They are diversified across different asset classes to help smooth out dramatic swings, regularly rebalanced to keep your investments aligned with your long-term risk profile, and may include safeguards such as stop-loss orders — which automatically sell investments if prices drop to a certain level.

When these strategies are paired with a disciplined, long-term view, they help you keep your cool during volatile times. But even with these protections in place, emotions can still take over — making it tempting to act on fear rather than facts. That’s where Zurich’s guidance can make all the difference, helping you stay focused on your bigger financial goals, no matter how bumpy the ride gets.

Two powerful behavioural tendencies often drive panic selling — both rooted in how our brains process short-term setbacks.

1) Short-sighted views of losses – Zooming In on the Short Term

Human beings dislike losses far more than we enjoy gains of the same size. This instinct, called loss aversion, is hardwired into our decision-making. When it’s paired with a short-term focus — checking our portfolio daily or weekly — even small dips in value can feel like major threats. This narrow, “zoomed in” perspective makes temporary losses seem more significant than they really are. For example, a 3% dip in a single month might feel alarming if you see it on a graph in isolation, even though it could be a minor fluctuation in the context of a 10-year investment plan. By focusing too closely on the moment, we lose sight of the bigger picture and may sell too soon, turning temporary paper losses into permanent ones.

2) The Pull of Recent Events – Believing Today Will Last Forever

During market turbulence, recent declines and negative headlines dominate our thinking. This mental shortcut makes us believe that what’s happening now will keep happening in the future. If the market has been falling for a few weeks, it’s easy to assume it will continue to fall — even though history shows that markets tend to recover over time. This bias can create a false sense of urgency, pushing us to sell in the middle of a downturn, often right before a rebound.

When these two tendencies combine, they can create a powerful emotional pull to “get out” at the wrong time. We may tell ourselves we’re making a rational, protective decision — but in reality, we’re reacting to fear, not facts. That’s why recognising these patterns is so important: once we’re aware of them, we can take steps to counteract them and stay committed to a long-term strategy.

The best way to avoid panic selling is to shift your focus from short-term turbulence to long-term progress. Markets will always rise and fall in the short term — that’s normal. But if you take a step back and look at the bigger picture, you’ll often see that your investments have grown significantly since you began, even if there have been bumps along the way.

1) Use a Long-Term Reference Point

Instead of checking your portfolio every few days and reacting to the latest ups and downs, use the day you first invested as your anchor. Look at how much your portfolio has grown overall since then, rather than how it performed in the last week or month. This broader view smooths out short-term volatility and highlights the steady progress that’s often hidden by daily noise. It can also help you see market dips for what they usually are — temporary pauses or setbacks within a longer upward journey.

2) Reframe Losses as Part of the Whole Story

When a market dip causes your portfolio to lose value, it’s natural to zoom in on that single event. This narrow view makes the loss feel absolute and permanent, as though it has wiped out all progress. In reality, a short-term drop is just one chapter in your longer investment journey.

Think of it this way: suppose you invested $10,000. Over the next two years, your portfolio grows steadily to $14,000. Then, the market takes a dip and your portfolio falls by $800. At first glance, you might focus only on that $800 drop. But step back and look at the bigger picture — you still have $13,200, which is a gain of $3,200 compared to your original investment.

By reframing the loss in the context of your total journey, you shift the focus from a short-term setback to the progress you’ve made overall. This perspective is powerful because it removes some of the emotional sting from temporary declines. It helps you remember that even after a dip, you’re often still ahead of where you started.

Moreover, when you invest with Zurich, you’re not navigating turbulent markets alone. Our advisers provide personalised guidance to help you understand your options and keep your focus on long-term goals — even when the headlines are unsettling. Our professionally managed portfolios are designed with market fluctuations in mind. They’re diversified across different asset classes to help smooth out dramatic swings, regularly rebalanced to keep your investments aligned with your long-term risk profile, and may include safeguards such as stop-loss orders — automatically selling investments if prices fall to a predetermined level.

Investing is a long game. Temporary declines are a normal part of the journey; they don’t define your ultimate outcome. That’s where Zurich’s guidance makes a difference, helping you stay on track toward your bigger financial goals, no matter how bumpy the ride becomes.