This week on three different occasions, I had conversations with people that ended the same way. While most of the circumstances were different, the common denominator in all of the discussions was the hypothesis of whether it paid to sell an existing home or investment property. While the answer is not always going to be the same, in these particular situations, I ended the meetings by saying, “Only losers sell.”

Granted, “Only losers sell” is a provocative statement, but it underscores a crucial principle in investment strategy: the importance of holding onto appreciating assets like stocks and real estate for the long term. This concept is grounded in historical data and economic theory, which demonstrate that panic selling or short-sighted decisions often lead to missed opportunities for wealth accumulation.

Historically, the stock market has been one of the most effective means of growing wealth over time. According to data from the S&P 500, the average annual return since data was logged as exceeded 10%. Despite significant downturns during events like the Great Depression, the 2008 financial crisis, and the COVID-19 pandemic, the market has consistently rebounded and continued its upward trajectory.

Investors who sold during market downturns typically missed out on these recoveries. For instance, those who sold their stocks during the 2008 financial crisis missed out on the subsequent bull market, which saw the S&P 500 increase by over 400% from its low in March 2009 to its peak in February 2020.

Real estate, another prime example of an appreciating asset, has also shown consistent growth over time. The Case-Shiller U.S. National Home Price Index illustrates that, despite periodic declines, home prices in the U.S. have generally increased over the long term. Investors who sell their real estate holdings during market fluctuations often miss out on this steady appreciation.

For example, those who sold their properties during the 2008 housing market crash likely missed the subsequent recovery. By 2020, home prices had not only recovered but reached new all-time highs, driven by factors such as low interest rates and limited housing supply. What is going on in todays housing market will only continue to skew the numbers higher for years to come.

One of the primary reasons people sell appreciating assets prematurely is panic induced by short-term market volatility. Behavioral finance studies reveal that fear and anxiety often drive irrational selling decisions. This phenomenon, known as loss aversion, leads people to prefer avoiding losses over acquiring equivalent gains, often resulting in suboptimal investment choices.

Moreover, mismanaging finances can force investors to liquidate assets to cover short-term needs, sacrificing future gains. The key to avoiding these pitfalls is proper financial planning, which includes maintaining an emergency fund and ensuring adequate liquidity to cover unexpected expenses without tapping into long-term investments.

Successful investing requires patience and discipline. Historical data underscores the value of holding onto appreciating assets, despite short-term market fluctuations. Investors who adopt a long-term perspective are more likely to reap the benefits of compound growth and market recoveries.

By understanding the historical performance of stocks and real estate, asset owners can make informed decisions that align with their financial goals. Rather than succumbing to panic or short-term pressures, maintaining a disciplined approach to investing will ultimately lead to greater financial security and wealth accumulation.

Would You Rather: Would you rather pay off all your debt and have no savings or have $50,000 in savings but still owe $50,000 in debt? Please email or message me to let me know your choice! Please let me know if you have a good “Would you rather” question, and we will highlight your submission.

Shmuel Shayowitz (NMLS#19871) is a respected Real Estate & Finance Executive, Writer, Speaker, Coach, and Advisor. As the President and Chief Lending Officer of Approved Funding, a leading national mortgage banker and direct lender, Shmuel has facilitated over $3 billion of mortgages over the past two decades. Shmuel’s expertise spans various licenses and certifications, including specialized mortgage underwriter, licensed real estate agent, and accredited coach. His market insights and experience are highly sought after in the real estate, finance, and coaching industries. In addition, Shmuel is a seasoned real estate investor and property manager, facilitating thousands of rentals nationwide. Shmuel can be reached at www.approvedfunding.com/shmuel.