Panic selling after stock market falls is common, and some investors are more likely to do so, according to a study by the Massachusetts Institute of Technology.
Research shows that when the market falls, male investors over the age of 45 who are married, have children and boast "rich investment experience" are more likely to sell.
"these are important drivers of panic selling." Chi Heem Wong, a co-author of the study and a researcher at the Massachusetts Institute of Technology, said that many people who leave the stock market during a fall will not come back, missing out on the opportunity to recover.
While the study does not reveal why some investors may be more vulnerable to emotional selling, financial experts say the findings further raise questions about how factors such as gender, age, marriage and family affect investment behaviour.
Amanda Clayman (Amanda Clayman), a financial therapist in Los Angeles, says research shows that these sellers are overreacting emotionally because their decisions are contrary to expectations. "obviously, these people are trying to protect themselves." She said.
While most investors are vulnerable to emotional choices, the MIT findings are consistent with other studies, suggesting that men may be more likely to act on their own impulses.
"Women are less likely to take such a major and decisive action because they are not sure whether their impulses or feelings are right." Clayman said.
According to a study by Fidelity, men are 35 per cent more likely to trade investments than women, and trying to timing the market tends to lead to lower returns.
In addition, another study from the University of British Columbia found that deals that try to achieve stability in turbulent times tend to have the opposite effect.
Because humans have survival instincts, it is challenging to avoid a fight-or-flight response, which includes clicking to sell when stocks plummet, says Mr Clayman.
However, she says people who may be more prone to panic selling need to establish a system of checks and balances, such as calling peers or discussing decisions with partners to protect themselves from emotional reactions.
"when we think about it in advance, we are not very accurate in assessing how to deal with actual threats." "most of us are more scared than we think," Clayman said. "