It's shaping up to be a brutal end to the trading week this Friday, with investors frantically pressing the sell button on their shares. At the time of writing, the S&P/ASX 200 Index (ASX: XJO) is nursing a heavy loss of 1.5%, putting the index just above 8,600 points. That's a level we haven't seen since mid-July.
Investors seem to be selling shares across the board. Stocks ranging from Commonwealth Bank of Australia (ASX: CBA), BHP Group Ltd (ASX: BHP) and Telstra Group Ltd (ASX: TLS) to Woolworths Group Ltd (ASX: WOW), Newmont Corporation (ASX: NEM) and CSL Ltd (ASX: CSL) have lost skin at this point of the trading day.
It seems today's pessimism stems from the realisation that interest rates, both here and around the world, might not be coming down as fast as investors may have hoped (or perhaps prematurely predicted). Or any further at all.
But this is not a one-off day of stock selling. This trend has been in motion for a few weeks now. The ASX 200 Index last peaked at 9,115.2 points back in October, a new record high at the time. Since then, the index has now tumbled close to 5.5%.
Given 1.7% of that decline has happened over just his week, we could say that the ASX share sell-off is accelerating. So, should ASX investors sell their shares today before things get even worse?
Image source: Getty Images
Is it time to sell your ASX shares?
Understandably, this course of action might be very tempting for ASX investors. But it is probably the wrong course of action.
Selling your shares in the midst of a market sell-off is almost always a mistake.
There are legitimate and prudent times to sell an ASX share. Perhaps you need the money to buy something more lucrative. Perhaps the reasons, or investment thesis, that prompted you to buy the shares in the first place turned out to be too optimistic.
But selling out just because everyone else is, and you are afraid of losing even more money, is not one of them. In fact, most experts would tell you that's one of the best ways to lose money in the stock market.
One of those investors is the legendary Warren Buffett. Buffett is famous for buying when most people are selling shares. That's epitomised in his famous quote, "Be fearful when others are greedy and be greedy when others are fearful".
I also like one of these lesser-known quotes, which goes like this:
Buy a stock the way you would buy a house. Understand and like it such that you'd be content to own it in the absence of any market.
Most people would call you crazy if you were clamouring to sell your house after someone told you it was worth 5% less than it was a month ago. Yet plenty of investors are okay with selling their shares under similar circumstances.
If we all adopted this attitude, I think far less money would be lost on the share market.
