Stop ‘revenge investing’: why panic selling is your portfolio’s worst enemy

You see red on your screen, the gut drops and before rational thought has a chance to intervene, the finger is already hovering over the sell button. It is one of the most common and most costly moments in investing, and almost everyone has been there. The question is what you do next.

In this episode of Money Hacks, a podcast by The Business Times,  Howie Lim speaks with Grace Tay, associate director at finexis advisory, for a conversation that cuts through the noise of market volatility and gets practical about the psychology of loss, recovery and getting back in without making things worse.

Why listen

• Why the worst market declines are not the sharp ones but the slow grinds  Tay explains why a protracted bear market like 2022 broke far more investors than a sharp V-shaped crash, and why the longer people stare at a falling portfolio the more likely they are to sell at exactly the wrong moment.

• Why missing just 10 of the market’s best days would cut your returns in half  Tay cites JP Morgan research showing that seven of the ten best market days occurred within two weeks of the ten worst. Timing the bottom requires getting two things right simultaneously. Almost nobody does.

• What get-evenitis actually is and why it is more dangerous than doing nothing  The behavioural finance term for aggressive catch-up investing after a loss. Tay explains the maths of why a 50 per cent loss requires a 100 per cent gain to break even, and what happens when the catch-up bet goes wrong.

• The reframe, reset and re-enter framework for investors of any age  Tay walks through a practical three-step approach that works whether you are 25 or 55, with different answers for each life stage.

A market loss does not determine your outcome but your behaviour could. Listen now.

Discover more episodes at bt.sg/podcasts. Got feedback? Email us at btpodcasts@sph.com.sg.

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Written and hosted by: Howie Lim (howielim@sph.com.sg)

With Grace Tay, associate director, finexis advisory

Edited by: Howie Lim & Claressa Monteiro

Produced by: Howie Lim & Chai Pei Chieh

A podcast by BT Podcasts, The Business Times, SPH Media

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