This is how costly panic selling can be in the pandemic-era stock market

IN ONE CHART

Panic on Wall Street isn’t uncommon. So it is no surprise that when anxiety reached a fever pitch in financial markets back in March, investors unloaded assets considered risky like stocks, in attempt to avert the money-losing proposition implied by COVID-19 pandemic that was gripping the nation.

However, the knee-jerk attitude of sell-first-ask-questions-later can be tremendously costly in the long run. It is a point that Wells Fargo Investment Institute attempts to illustrate in a striking chart published on Tuesday (see attached).

Well Fargo’s team ran four hypothetical investment scenarios in which investors responded in the wake of U.S. stock markets hitting their bear-market lows in March by divesting varying portions of their stock portfolios.