The Key Lesson Everyone Needs to Learn About Investing—When to Sell

My landlord texted me, clearly in a panic… 

Late last year, we sat down for coffee on a snowy morning in Prague. He wanted to pick my brain about the crypto market. All his buddies on the oil rigs he services in the North Sea were raving about oodles of money they were raking in on all these cryptocurrencies with funny names—Polkadot, PancakeSwap, Polygon.  

Knowing that I was mining cryptocurrencies and investing in dozens of other projects, he wanted me to explain what all the hype was about. 

Ultimately, I gave him a rundown on bitcoin, Ethereum, and other high-quality crypto (the same advice I’ve been giving here in Field Notes and especially in my monthly Global Intelligence Letter). He opened a crypto-trading account, invested about $7,000, and quickly watched it rise to just over $19,000. He was exuberant!  

And then in the past few weeks, as the market (briefly) fell apart, the panicked text messages started to flow… 

He wanted to know whether he should sell, and why it was that I had zero panic when he was sitting in a Dutch airport about to lose his mind because his $19,000 had dwindled to $11,000. 

I told him what I tell everyone in moments like this: Whether it’s the crypto market or the stock market, never exit your position when the fundamentals haven’t changed. 

This is the biggest lesson everyone needs to learn about investing. And this is why I maintain our online Global Intelligence portfolio with my latest recommendations about each position.  

Because to profit as an investor, you not only need clear advice on how and what to buy…you need clear advice on when to sell—or when not to sell, as the case might be.  

Let me explain… 

Some version of my landlord’s sentiment—panic in the face of heavy selling—hits my inbox, my text chat, or my WhatsApp account several times a week these days. Friends and family are freaked that a $60,000 bitcoin is now below $40,000. That a $4,000 Ethereum sank below $2,000 at one point. 

The same panic invades my electronic life when the stock market sees big sell-offs. Everyone invariably asks, “Should I get out?” and “Why aren’t you as worried as I am?! Didn’t you see [insert Nervous Nelly du Jour here] warning on CNBC that the sky is falling and that the world ends next Thursday?!” 

Here’s the reality: Bear-market moments always—always!—arise amid a bull market. Likewise, bull-market moments always sneak their way into a bear market. It’s just the nature of the financial markets. 

I’ve seen this over and over and over again in my career. As a Wall Street Journal investment writer, I was deep in the middle of the tech-bubble bursting in 2000 and the “flash crash” of 2010. As a trader and analyst for a hedge fund, I had a front-row seat for the Asian currency crisis of 1997 that (temporarily) killed small-cap stocks in America.  

Lots of stocks fell apart in those moments, sure, but the good companies survived just fine. Many rose or held their own. Getting out would have been an even bigger mistake. 

Here’s a perfect example… 

I was writing about the destruction of healthcare stocks in the early ’90s when Team Clinton was hellbent on healthcare and prescription drug-price reform. 

And you know what I learned in all of those panic-inducing moments? Patience really is a virtue when the underlying fundamentals haven’t changed. 

Frankly, I learned that the hard way.  

I listened as all the supposedly smart market-mavens insisted in the summer of ’93 that Clinton’s healthcare reform was going to destroy pharma stocks such as Merck, Pfizer, and others. I remember arriving at home one night (I was working for the WSJ in Dallas at that point) and laying out for my wife why we must sell our shares of pharma giant Merck. 

She was an RN working for a benefits-management firm. She understood healthcare and pharma better than I ever could. And she questioned my rationale. But I persisted; she could hear the worry in my voice. So, she said, “Fine, do what you want.” 

Merck fell from about $19 to about $15. I sold into the panic, taking a small profit…only to watch Merck spend the rest of the decade climbing to nearly $90.  

I ended up getting back into Merck in the $50s, meaning I missed a huge run.  

All because I reacted to the panic around me and didn’t stop to consider there might be a bull market specific to healthcare because of the aging population globally. 

Since then, I’ve learned to stop and think: Has anything fundamentally changed to cause this sell-off? 

If the answer is no…I either stand pat and hold strong. Or, as I’ve been doing amid this latest crypto hiccup, I’ve been buying—increasing my position in several exceedingly high-quality projects that are going to be big winners as the cryptoconomy grows ever-larger. (You can view my crypto recommendations as part of your subscription to the Global Intelligence Letter.) 

So, that’s my message today: Don’t panic when the world around you is losing its mind. 

It’s the same mentality I bring to my Global Intelligence Letter subscribers. I’m not going to react in knee-jerk fashion to every hiccup and burp that hits the stock market or the crypto market.  

It’s counterproductive because it takes you out of good positions way to early—either with a loss or a small profit—and then you end up mad at yourself for missing the big gains that invariably follow. 

I’ve seen it too many times. 

As I told my landlord, “Sit tight. If you have a bit of spare cash, buy a little more. You’ll be happy you did.” 

He listened to me. 

And already, the happy texts are flowing again…