It is natural to get worried when the value of your investments goes down; no one likes to lose money! But, as we all know, that is part of the process; markets go up and markets go down. So, assuming you have a long-term investment strategy that is attuned to your risk profile, when do you sell, if ever?
Every down market is different, but our most recent experience with the market reaction to the COVID pandemic in 2020 is telling. At its worst, from the chart below, the global equity markets (VT, the green line) tumbled -34.2% due to fear and the economic effects of the pandemic. However, as we all know, markets recovered strongly once the situation got under control and became normalized and markets reached new heights in January 2022. U.S. markets (IVV, the blue line) had a similar drawdown, but reached higher highs than the global equity markets. Core U.S. bonds (AGG, the gold flattish line) meandered aimlessly during this time frame to a mostly flat-line profile. In the context of the pandemic, this latest Russia/Ukraine crisis has a long way to go with global equity markets (VT) showing a recent drawdown of only -13.2%.
So, when do you sell, if ever? It is really two decisions, when to sell to get out and when to buy to get back in; each decision is critically important, and no one can outguess the market. Clearly, selling did not make sense during the pandemic since the market recovered and reached new heights. Yes, you could have sold at the recent high and bought back at the recent low, but that is all market timing and study after study shows that no one can consistently outguess the market except by luck.
I sound like a broken record (for those who remember what a broken record sounds like!), but best to stick with a long term investment strategy that matches your risk profile to achieve your goals.