Should I Sell My Stocks Now or Wait for a Bounce?

As the markets swing wildly from rally to sell-off, jolting investors’ nerves, many are asking, “Should I sell my stocks now?” It’s an inevitability. Every time markets stop going straight up for a bit, retail investors start to get nervous and wonder if it’s time to get out of the market. But they’re asking the wrong question. Because nobody can time the market. And anyone who says they can is lying.

So today I want to share some wisdom from some of the greatest investors throughout history. Because every single one of them says timing the market is for fools. And every one of them says that time in the market is what makes investors really wealthy.

Should I Sell My Stocks Now Because Markets Are Down?

If you’re asking, “Should I sell my stocks now because markets are down?” then David Swensen has some choice words for you…

The underlying driving force behind market timing decisions seems to be emotional — fear, greed, chasing performance — buying something after it has gone up, disappointment, and sales after something has declined.

— David Swensen

Now, while you might not have heard of Mr. Swensen, the best investors on Wall Street speak his name with reverence. You see, David was the chief investment officer at Yale University from 1985 until his death in 2021.

And during that time, Mr. Swensen completely changed the way the endowment game was played. His strategies were so successful that nearly all of the Ivy League endowment programs followed suit and adopted his methods.

He grew the fund from a mere $1 billion when he first took the reins to over $31 billion by the end of the 2010s. And he did it by staying invested in the markets no matter what happened.

He noticed that most investors based their decisions on emotion, selling stocks that had already fallen while chasing stocks that were running higher. Essentially, people were buying high and selling low, which is the opposite of how you make money in the stock market.

So if you were to ask David Swensen, “Should I sell my stocks now that markets have dropped?” he’d give you a resounding “no way” in response.

Should I Sell My Stocks Now Because of Tariffs?

But maybe you’re wondering if you should sell because stocks could fall farther thanks to the confusion tariffs are causing right now. And if you’ve been asking, “Should I sell my stocks now because of tariffs?” then I’ve got another great investor with some wisdom to share…

Attempting to guess short-term swings in individual stocks, the stock market or the economy is not likely to produce consistently good results. Short-term developments are too unpredictable.

— Lou Simpson

Now, Lou Simpson is another name you might not recognize. But Warren Buffett is one you certainly do. And Warren once called Lou “one of the investment greats.” You see, Lou Simpson was in charge of investments at Berkshire Hathaway’s GEICO for more than 30 years. And he was one of Buffett’s favorite fund managers.

Lou understood the same things Warren does: That short-term swings will happen, but that it’s the long-term direction of a company that’s truly important to investors. And Lou was so good at the business that Warren even said, “His performance made mine look bad.”

While Lou was at GEICO, he averaged a 20% annual return, while the S&P 500 only returned about 13% a year. That’s something Buffett himself said was impossible. So it’s a pretty big feather in Lou’s cap. And a good reason to listen to him.

These tariffs and trade wars are all short-term developments. They’ll price stocks in the short term, but they won’t really mean much in the grand scheme of things. Markets react to short-term developments, but they follow long-term trends.

So if you’re asking, “Should I sell my stocks now because of tariffs?” you need to remember that the trend is your friend and the trend is upward.

Should I Sell My Stocks Now Because Everyone Says I Should?

But I get it. When markets are dropping, all of the perma-bears come out of the woodwork. They start to tell you that the sky is falling. The end is nigh. The bell is tolling and it tolls for you and your stock portfolio and savings.

If all you’re hearing is doom and gloom, it’s reasonable to ask, “Should I sell my stocks now because everyone says I should?”

But, again, I’ve got some words of wisdom from one of the greatest investors to ever live, Sir John Templeton…

In all my 55 years on Wall Street, before I retired to do something vastly more important, I was never able to say when the market would go up or down. Nor was I able to find anybody on Earth whose opinion I would value on the subject of when it would go up and down.

— Sir John Templeton

Now, in case you’re not aware of who John is and why he’s one of the best investors in history, let me share some details: In 1954, Mr. Templeton founded the Templeton Growth Fund, which he ran for the next four decades. And over that time, the fund returned over 15% per year, every single year.

That performance led Money magazine to name him the greatest global stock picker of the century. And he not only had no clue about how to time the market, but also pointedly stated that neither does anyone else.

So if the best stock picker in modern history says he can’t tell you what direction the market will head next week… do you really think the anonymous account you follow on Reddit or X or Instagram can do any better?

And if you’re asking, “Should I sell my stocks now because everyone says I should?” consider who “everyone” is and choose to ignore them if they haven’t been named a better stock picker than Sir John.

Should I Sell My Stocks Now for Any Reason?

Look, I’m pretty sure you’ve got the main bullet point here, but I’m going to cover it one more time if you’re still asking, “Should I sell my stocks now?” for any reason…

If timing the market is such a great strategy, why haven’t we seen the names of any market timers at the top of the Forbes list of richest Americans?

— Peter Lynch

Peter Lynch was one of the most successful money managers in modern history. He was the manager of the wildly successful Magellan Fund at Fidelity Investments from 1977–1990.

And while he was at the helm, that fund returned average annual returns worth a whopping 29.2% each year. Compared with the average market returns back then of around 8%–10% a year, that’s more than impressive. It’s astonishing!

But what’s even more astonishing is the growth of assets under management (AUM) while Lynch was leading the fund. In 1977, he was managing about $18 million. By 1990, the AUM had grown to over $14 BILLION as folks rushed to get in with one of the greats.

And I think his quote is incredibly poignant for today’s discussion. If timing the market were a successful strategy for investors, you’d think at least one market timer in history would have gotten rich from it.

But, alas, we’ve never once had a market timer make the Forbes list of richest people. We’ve had a long-term investor (Warren Buffett) on it for as long as I can remember, though. And his favorite holding period, as he likes to point out, is forever.

So if you were to ask Peter Lynch or Warren Buffett, “Should I sell my stocks now?” I guarantee they’d tell you the same thing as me: For the sake of your future, please don’t.

Should I Sell My Stocks Now or Should I Buy Stocks Instead?

Now you’re starting to ask yourself the right questions. And if you’ve made it to this point, one more investing legend has some sage advice for you…

The prevailing view has been that the market will earn a high rate of return if the holding period is long enough, but entry point is what really matters.

— Seth Klarman

In case you’re not familiar, Seth Klarman is an American billionaire hedge fund manager. He’s the chief executive and portfolio manager for Baupost Group, a hedge fund with close to $30 billion in AUM. Seth, like Warren, is an adherent to the strategies of Benjamin Graham and is known for buying “unpopular assets.”

And he’s telling you that you need to do the same thing as him: Buy the stuff nobody else wants when they don’t want it. It’s the modern-day equivalent to buying when there’s blood in the streets.

And it’s how you can achieve the same kind of results as every investor we’ve heard from today. You can beat the market by buying the market when it’s down. That’s what these guys all did…

They didn’t ask themselves, “Should I sell all my stocks now?” They asked themselves, “Which stocks should I be buying now so that I can get the biggest returns in the long run?”

So if you’re still asking yourself, “Should I sell all my stocks now?” I want to answer one more time: No! You should not sell your stocks now.

You should be buying stocks now. And if they go down more next week, you should buy more of them then. And keep buying them until they stop going down.

Then keep buying them as they go up, too. Just keep buying them and stop thinking about selling them and things will work out very well in the end.

Should I Sell My Stocks Now? — The Bottom Line

The bottom line here is that you shouldn’t sell your stocks because the market drops or because of short-term developments, or because someone on TV or the internet said you should.

And Bill Miller, former chief investment officer at Legg Mason Capital Management, agrees…

Two things seem pretty clear to me: first, no one can consistently buy at the low or sell at the high (except liars, as Bernard Baruch said), and second, lowest average cost wins.

— Bill Miller

The emphasis is mine, but I’m sure Bill would agree that statement deserves some extra oomph. Because he’s right. The lowest average cost wins, because nobody is ever going to get the lowest actual price through anything but sheer luck.

So don’t sell your stocks. Buy more stocks. And then keep buying stocks.

Then you’ll have the lowest average price possible. And a decade from now, you’ll have more money than you know what to do with if you just stick to that simple strategy.

Then you can write in to tell me just how successful you’ve been.