Panic Selling During Crashes

The S&P 500 has crashed 30%+ exactly 10 times since 1929. Every single time, it recovered and went higher. The average recovery time is 3.3 years. Investors who sold during the March 2020 COVID crash (when the market dropped 34%) missed a 70% recovery in the next 12 months. Behavioral finance calls this "loss aversion" — losses feel 2.5x more painful than equivalent gains feel good (Kahneman & Tversky, 1979). The solution: automate your investments and delete your brokerage app during crashes. Dalbar studies show the average investor earns 3.6% while the S&P 500 earns 10% — the gap is entirely emotional trading.