Should I sell my stocks?

Share prices are falling almost across the board. Market volatility is the highest it’s been since the depths of the pandemic era. And there seems to be no end in sight. With all of this going on, should I sell my stocks? 

Volatility

It’s tempting to think that I could sell all of my stocks now and buy them all back later for less than I sold them for. That way, I could get my original investments back having saved money by being out of the market while shares were falling. 

Take Amazon.com as an example. I currently own shares of Amazon in my portfolio. The stock has been coming down steadily all this year. As I write, it’s down around 21% since the beginning of the year and it’s down another 2% today. And it doesn’t look like stopping any time soon. So maybe I could sell my Amazon shares today and buy them back in the future when the share price is lower than it is today.

I can see the appeal of this line of thinking, but I don’t think it’s for me. I believe that selling my stocks now is a very bad idea. There are two reasons for this. The first is that I have no idea when the markets will reverse course. The second is that it doesn’t fit with how I think about investing. 

Why I’m not selling

The first problem with the idea that I might sell my stocks now and try to buy them back more cheaply in the future is that I have no idea how much lower they will go. For all I know, the amount that I sell my stocks at might be the lowest that they’ll ever be. So I might not get the chance to try and buy them back at a lower price. Trying to time the market really is a tough task.

The second — and bigger problem — is that selling stocks now doesn’t fit with the way I think about investing. When I invest in a company, I believe in it long term and aim to benefit from the cash it produces. It isn’t to make money by selling it for a profit in the future.

As I don’t plan on selling my investments, the amount someone is prepared to pay for them doesn’t concern me. If the market price is more than I think the company can plausibly produce in cash, then I might be tempted to sell. But if the share price is temporarily lower, it doesn’t concern me.

In other words, I think about buying stocks as owning part of the underlying business. This means when stock prices are falling, I have opportunities to own a bigger chunk of the businesses I already part-own at lower and more attractive prices. Thinking about investing in this way means it’s much more attractive for me to buy stocks when they’re trading at lower prices than it is to sell them. 

I don’t know whether or not the stock market will go lower. If it does, I’ll see it as an opportunity to add to the investments I already have. But I think I’ll do better by staying the course. So I don’t anticipate selling my stocks any time soon.