Panic Selling: i. Wide-scale selling of an investment, causing a...

Panic Selling:
i. Wide-scale selling of an investment, causing a sharp decline in price. Specifically, an investor wants to get out of an investment with little regard of the price obtained.

ii. The selling activity is problematic because the investor is selling in reaction to emotion and fear, rather than evaluating the fundamentals.

iii. The panic is typically the “fear that the market for a particular industry, or in general, will decline, causing additional losses.

iv. Common causes of panic selling are:
- High speculation in market
- Economic instability (Depressed Rare Earth Prices)
- Political issues (Anti-Lynas Environmental Group in Malaysia)

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Ways to Handle Panic Selling:

i. Value investors don't let the market tell them what to do. They take advantage of the market's offers to buy and sell at various prices. So the delight in a falling market is a primary distinction between value investors and others.

ii. Value investing isn't about making great macro calls. It's not about calling the next crisis, or predicting interest rate trends or GDP numbers. It's impossible to accurately predict those things. Value investing is about doing research, taking your time, picking great companies, buying them at cheap prices, and holding them for as long as the business continues to perform well. The moment you think it's about predicting the future – and that you've got a crystal ball – you've already lost.