The financial markets are currently in turmoil, predictions are tough, and many stocks are plummeting. Driven by record inflation in the American markets, many investors are witnessing the repercussions on their investment portfolios. Given the situation, it is only natural to wonder whether it is wise to sell one’s shares before their values continue to drop. Making a decision in such a volatile context is challenging, let us help you understand.
A Difficult Situation to Bear
The current crisis, fueled by various global crises, is causing inflation to soar in many countries, particularly in the United States. This rise is also making European markets shaky, even though they are supported by the ECB (European Central Bank). Indeed, for several years now, central banks have been striving to support and encourage investments in financial markets by injecting liquidity and maintaining low interest rates. According to some experts, this support policy is no longer sustainable, and the situation is changing.
This decision has a major impact on inflation and financial markets and explains the current state of affairs. It’s in this dizzying context that many investors are hesitating between selling their shares, engaging in securities lending, or taking advantage of the low prices to enter the market. Indeed, the momentum is strong, and it is difficult not to panic when seeing all values sinking into the red.
How to React to This Crisis?
This crisis is far from being the first for financial markets. It is part of the economic cycle. There are events that occur and can lead to unprecedented consequences, as seen during the subprime crisis or the stock market crash during the Covid-19 pandemic. The most important thing in a crisis like this is to avoid panicking. Markets are capable of rebounding and returning to their previous levels; for that, one must remain patient.
However, patience should not be confused with inaction. Sitting tight and not selling one’s shares with the hope that they will regain their value is not necessarily the right approach. One must make the right choices. Some stocks are more volatile than others and may never recover beyond a certain threshold. These can include Tech stocks, especially those that benefited from the pandemic to climb.
On the other hand, there are more stable and solid stocks whose prices could rise over time. It is thus advisable to retain shares in leading companies in their field that
will know how to bounce back when the time is right. Obviously, this requires careful consideration before deciding to sell or hold on to different stocks, but it is better to make a decision than to wait for the situation to resolve itself, only for some stocks to never regain their former level.
