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Survey finds many retail investors sell during drops, then reenter quickly
In the latest market selloff, 25% of retail investors sold and the market recovered within weeks, while emotional trading costs some investors an average of $1,606.
A June MarketWise survey of 1,002 retail investors finds that many people act during market declines in ways that can backfire when prices rebound quickly. The survey says 25% of participants sold an investment during the most recent market drop, only to see the market recover within weeks, according to Yahoo Finance.
The survey also highlights the role of emotional behavior in trading. It found that 43% of retail investors who lost money in an emotional decision gave up an average of $1,606, and 31% said they trade emotionally but only 20% described themselves as emotional investors.
Moneywise, via Yahoo Finance, reports that fear of missing out can be especially difficult to spot. While 48% of respondents said they made a FOMO-driven purchase within the last 12 months, the survey suggests many investors do not recognize these decisions as emotional.
CFP Derek Notman, as cited by Yahoo Finance, said emotional mistakes can show up after the initial feeling, such as when a missed opportunity leads investors to overcommit to the next deal and skip due diligence. The outlet also notes that the survey includes advice focused on reducing emotional trading behavior.