Should I Sell My Stocks Now or Later?

In just the past week alone, markets have experienced their worst drops in years. We’ve seen 1,000-point swings in the Dow and Nasdaq. We’ve watched as AI darlings like Nvidia and Microsoft shed hundreds of billions in value in a single day.

And as I’m typing this, the Nasdaq is down 8% over the past week, the S&P is down 6% and the Dow is down 5%. That’s after all three rose nearly 2% in the day’s trading. Stocks rally in the morning, only to pull the rug in the afternoon and erase nearly all their gains. And those drops combined with that volatility has many investors asking the question: Should I sell my stocks now?

It’s a completely valid question to ask oneself in times like these. Especially when there are countless anonymous accounts on the social media networks telling you that the end is here and the sky is falling. It’s natural to get a little fearful. But you’ve got to remember what Warren Buffett said about fear, you’ve got to be greedy when everyone else is fearful. And right now, there aren’t many people on Wall Street who aren’t shaking in their Italian loafers and Patagonia vests.

Everyone is Scared. Should I Sell My Stocks Now?

Now, that heading might sound like a silly statement, but that’s exactly what people are saying when they ask if they should sell stocks now. That image above is a screenshot of the “fear & greed index.” It’s a combination of seven indicators measuring the emotions of the marketplace.

The first is market momentum and it’s measured as a relationship between the S&P 500’s level and its 125-day moving average. When the level drops below the average, that’s a fear signal. Then you’ve got price strength. And that’s just the difference between stocks making new 52-week highs and new 52-week lows.

Then there’s an indicator that measures the breadth of the market. Simply put, that’s how many stocks are advancing versus how many are retreating. The index then takes into account the relationship between weekly put and call options. A high reading is an indication of fear.

Of course, the VIX comes into play. When it’s above the 50-day moving average, that’s a sign of fear, too. Then the difference between demand for stocks and bonds shows if people are seeking safe havens. And the difference between the yields on junk bonds and investment grade ones is the final measure.

• Market Momentum – The S&P 500 versus its 125-day moving average
• Stock Price Strength – New highs minus new lows on the NYSE
• Stock Price Breadth – Number of stocks going up minus number of stocks going down
• Put and Call Options – 5-day average of puts divided by calls
• Market Volatility – The VIX Index versus its 50-day moving average
• Safe Haven Demand – Difference between 20-day stock and bond returns
• Junk Bond Demand – Difference in yields on junk bonds and investment grade bonds

And right now, everything but the strength of stock prices (which is neutral) is pointing to “extreme fear.” So, when you ask, “should I sell my stocks now,” you’re just agreeing that you’re scared too. What you should really be asking is what do smart investors do when everyone is scared.

Warren Buffett says they get greedy when others get fearful. And Nathan Rothschild said they buy when there’s blood in the streets. I’m not one to argue with them. As I’ve been saying all week, markets go up more often than they go down. This study I keep sharing proves that’s true:

And the point of investing is to buy low. It’s not to sell low. So, if you’re asking yourself, “should I sell my stocks now,” remind yourself that you’d be selling them low. And then remind yourself that you’re an investor and investors sell stocks when they’re high, not when they’re low. At least, that’s what successful investors do.

So, Should I Sell My Stocks Now or Not?

Usually I’d call this the bottom line or the main bullet point. Today, I only have one answer — No. You shouldn’t sell your stocks now. If you’re trying to time the market, then you already missed. Stocks have fallen. But this isn’t one of those 1980s Life Alert commercials.

These markets both can and will get back up. That’s why the question shouldn’t be “should I sell my stocks now.” It should be “which stocks should I be buying.” Because investors who buy when markets are down profit as they go back up. But investors who sell when markets are down end up buying after they’ve gone back up.

Don’t wait for the stock market to go back up. By then, your chance to buy stocks while they’re down will be gone. You’ve got to be brave in the face of adversity. You’ve got to be greedy when others are fearful. You’ve got to look at your own blood running through the streets and think what a great time it must be to buy.

That’s how you beat the markets. That’s how you cement family legacies. That’s how you win. Now, let’s stop asking, “should I sell my stocks now.” And let’s start looking for the stocks we should be buying.

I and the rest of the Wealth Daily team will be back soon with some insight into the very best of those.

To your wealth,

Jason Williams

@TheReal_JayDubs

Angel Research on Youtube

After graduating Cum Laude in finance and economics, Jason designed and analyzed complex projects for the U.S. Army. He made the jump to the private sector as an investment banking analyst at Morgan Stanley, where he eventually led his own team responsible for billions of dollars in daily trading. Jason left Wall Street to found his own investment office and now shares the strategies he used and the network he built with you. Jason is the founder of Main Street Ventures, a pre-IPO investment newsletter; the founder of Future Giants, a nano cap investing service; and authors The Wealth Advisory income stock newsletter. He is also the managing editor of Wealth Daily. To learn more about Jason, click here.

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