Market sell-off? How NOT to handle big stock declines

Though Gen Z would have been too young, many remember Black Money in '87. The market crashed causing mass-panic and sell-offs. But the hardest earned lesson in the aftermath had nothing to do with avoiding investments; it was actually patience, since the market recovered fairly quickly. Hosts of Yahoo Finance's new show Living Not So Fabulously, David & John Auten-Schneider, got to hear a first-hand account of the harrowing day from Jane Sasseen, founding executive director of the McGraw Center for Business Journalism. Sasseen explained that had she not panic-sold half of her investments, she wouldn't have taken a loss because markets always go up and down. In reflecting on her experience, she said, "Finally at some point I realized, oh, this other half is doing well, maybe it's time to put the money back and I would have been much better off just to leave it and forget about it."

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Video Transcript

It was early in my journalism career, I was um this was uh you know, what was it?

Black Monday in 87 because, you know, because I'm old.

Um So many of you listening probably have never heard of this.

But it was like, I think it was actually the biggest one day loss in the market even beyond like the Great Depression.

Um So it was like 87 and I was freelancing, I was living in Europe and freelancing and I had had, I inherited some money and I had a small amount of money that I had put in the market.

So I get all these calls from people because I was started in business journalism and people were like, you know, you gotta do stories on, you know how the markets in Europe, how the, the European markets are reacting.

Meanwhile, I had just put this tiny amount of money that I had inherited, which was allowing me to live there and freelance with no money into the market.

And I spent all day watching it collapse and I was like, everybody else I was frozen.

I like, I had no idea what to do.

So at the end of the day I kind of went home and, like, I can't stand this.

What if I lose everything?

And I did, I think it's kind of a stupid thing that lots of people do.

It's like, I'll leave half in and take half out and then sort of, I'm covered either way, so pulled half of whatever it was out, you know, went about doing what, you know, work and writing stories and everything and has happens all the time, you know, eventually the market recovered and it actually didn't take that long if I recall to recover.

Meanwhile, I was frozen and I think that's what people do.

You get frozen because you don't know, you know, because you can't predict.

And so like the half of the money that I'd taken out because I had to make an active decision to put it back in, it sat there for, you know, I don't remember how long now, but, you know, finally at some point I realized, oh, this other half is doing well, maybe it's time to put the money back and I would have been much better off just to leave it and forget about it.

And I think people forget all the time that, you know, markets do.

They go up, they go down and, you know, and anybody who thinks they can time it, you know, as an individual, maybe professionals can, I don't really think they can either.

But certainly as an individual, you can't time it.

So you just have to kind of decide, I don't need this money for whatever your horizon if, you know, especially, you know, at that point I was, I think 28 it's like, put the money in and forget about it.

You know, I don't need this money.

This is my retirement money.

I don't need it for the next 40 years.

I shouldn't think about it.

And, you know, and don't look at it, you know, weekly or monthly or daily.

It's, I think that's the biggest mistake people make.