It’s easy to preach about staying calm and rational when investing. “Don’t sell in fear. Don’t buy in excitement. Keep emotions out of your financial decisions.” I’ve written these words myself—more than once—because they’re solid advice.
But here’s the truth: knowing you shouldn’t act emotionally is entirely different from actually resisting emotion when you're in the middle of a crisis.
One of my biggest investing mistakes was doing exactly what I tell others not to do—reacting out of fear during a time of intense personal and global stress.
👉 Discover how to build emotional resilience in your investment strategy.
The Pandemic Panic That Cost Me Gains
During the early months of the pandemic, I sold a portion of our stock portfolio. On paper, it looked like a prudent move: I offset capital gains with losses, so there was no tax consequence. I told myself I was de-risking—pulling money out of volatile markets and building a cash cushion.
And yes, as a small business owner with unpredictable income, having extra liquidity made sense. But the real driver wasn’t logic. It was fear.
Our four kids were home 24/7. We were wiping down groceries, avoiding contact, terrified for our aging parents. Friends lost loved ones. Hospitals overflowed—some even setting up beds in parking lots.
At the same time, the markets were plunging. Every headline screamed disaster.
Was it any wonder I made a move?
But here’s the thing: I had stayed calm during the 2008 financial crisis, even as banks collapsed and governments scrambled to stabilize the system. Why? Because my daily life wasn’t turned upside down. The pandemic wasn’t just an economic shock—it was a full-blown personal and societal crisis.
And in that emotional storm, I let fear override my long-term strategy.
Justifying Emotion With Logic
After the fact, it was easy to rationalize the decision. “I anticipated lower income,” I said. “I needed liquidity.” All true—but secondary.
The primary trigger was emotion. And that’s the sneaky part about behavioral finance: we always have a story ready to explain why we did what we did. But the story isn’t always the truth.
In hindsight, the financial cost wasn’t catastrophic—but it wasn’t zero, either. We missed out on significant market recovery gains. The S&P 500 rebounded within months, but we never reinvested that lump sum. I kept up our monthly contributions (automation saved us there), but the opportunity cost lingers.
Why It’s Easy to Be Rational—Until It’s Not
I consider myself financially literate. I’ve lived through the dot-com bust, the housing crash, and multiple market corrections. I write about personal finance for major outlets. And still, I faltered.
That’s the humbling reality: no one is immune to emotional investing.
The lesson isn’t just “don’t panic”—it’s “how do you protect yourself when panic sets in?”
Systems That Protect You From Yourself
Since that moment, I’ve built safeguards to prevent history from repeating itself. Here’s what works:
Automate Your Investments
We’ve had automated contributions to our 401(k) and brokerage accounts for nearly two decades. This isn’t just about consistency—it’s about removing emotion from the equation.
When money moves automatically, you’re not making a decision every month. You’re following a system. And systems don’t get scared.
👉 Learn how automation can transform your investment discipline.
Require a Second Opinion
I always talk big decisions through with my wife—but in high-stress moments, even smart partners can share the same anxiety. That’s why many people benefit from a financial advisor: not for stock picks, but for friction.
Having to explain your reasoning to someone else forces pause. It adds a checkpoint between impulse and action.
Reassess Your Real Needs—Objectively
Before selling, I should have reviewed our actual financial position: emergency fund size, projected expenses, cash flow buffers. Using a budgeting tool, I’d have seen we already had over a year of living expenses covered.
The market downturn lasted months—not years. If I’d waited until we actually needed cash, we’d have avoided selling low.
Reevaluate Your Risk Tolerance—Honestly
I’m in my mid-40s. The “120 minus age” rule suggests 75% in stocks. My portfolio is closer to 85%. On paper, that sounds aggressive but reasonable.
But risk tolerance isn’t just a number—it’s how you feel when markets drop 30% and your kids are home scared.
I didn’t account for how personal stress amplifies financial fear. Next time, I’ll look at our full net worth picture—including cash—to assess true risk exposure.
Slow Down—Especially When You Want to Act Fast
My dad’s advice echoes in my mind: “Slow down.”
When panic hits, the instinct is to do something. But the right move is often to pause.
Write it down. Run the numbers. Sleep on it.
Measure twice. Cut once—or better yet, don’t cut at all.
Frequently Asked Questions
Q: Was selling during the pandemic always a mistake?
A: Not necessarily. If you had an immediate need for cash or were near retirement, reducing exposure could be wise. The mistake was acting from fear without verifying actual need.
Q: How can I avoid emotional decisions in future crises?
A: Build systems—automation, second opinions, predefined rules—and review your financial plan before crises hit.
Q: Did you ever reinvest the money you withdrew?
A: Not as a lump sum. Monthly contributions continued, but we missed the initial rebound, which cost us long-term growth.
Q: How long did the market take to recover after the 2020 crash?
A: The S&P 500 regained its pre-pandemic peak by August 2020—just four months after the March low.
Q: Can automation really prevent emotional investing?
A: Yes—it ensures consistency and removes timing decisions. You buy high and low without having to decide when.
Q: Should I change my portfolio after a big market drop?
A: Only if your financial goals or risk tolerance have changed—not because of short-term volatility.
👉 See how disciplined investing strategies can help you stay on track through market swings.
Final Thoughts
My biggest investing mistake wasn’t selling during a crash—it was letting fear masquerade as strategy.
The fix isn’t willpower. It’s structure.
Automate your investments. Consult others. Know your real numbers. And when panic strikes, slow down.
Because the best financial decisions aren’t made in moments of crisis—they’re made in moments of calm reflection, long before the storm hits.
What was your biggest investing mistake? Learn from it. Build systems around it. And never stop refining your approach.