Investing

Market Selling Off? Take a Deep Breath

Market Selling Off? Take a Deep Breath

Market Selling Off? Take a Deep Breath

Zoe Team

3 min read

A financial advisor reviewing a plan with two clients at a table

Key Takeaways

Key Takeaways

  • Market sell-offs often trigger an emotional need for control.

  • Intra-year drops are historically common and normal in investing.

  • Long-term investors should avoid impulsive reactions to volatility.

Frequently Asked Questions

Frequently Asked Questions

Should I panic during a market sell-off?

No. While volatility can be unsettling, knee-jerk reactions often harm long-term strategy.

Are stock market drops normal?

Yes. Historically, intra-year corrections of -14% occur regularly, making recent drops part of normal market cycles.

How should I manage my investments during volatility?

Maintain a steady hand, ignore short-term noise, and ensure your long-term plan aligns with your financial goals.

We as humans are hardwired to believe in a story. Any story that has enough information to give us an adequate illusion of control. This human bias has gone into overdrive as the past few days have not been good for the stock market. If you combine last Friday and yesterday’s sell-off, the S&P 500 index was down -6.1% in total. Not to our surprise here at Zoe, we got a rush of inbound questions from our community, so I figured it was worth addressing it.

Is this sell-off a big deal? Yes and no.

Source: Wall Street Journal

Yes - if we look at the daily move in isolation.

Volatility, measured by the VIX index, went above the 45 level mark, which has only occurred 91 times since 1990 (or 1% of the time). If we look at the S&P 500 index, there have only ever been 144 days in its history that saw -4% drops. So yes, yesterday was undoubtedly a big daily drop. Having said that, I hear a lot of noise about the Dow Jones Index had the biggest point drop ever. However, absolute point changes do not really tell us anything. In percentage terms, the Dow fell -4.6% today, which doesn’t even put it on the top 50 list of all time. Just to put that number into context, on Black Monday on Oct 19, 1987, the Dow index fell -22.6%.

No. If we look at the sell-off from a yearly perspective, the sell-off looks, well, fairly normal.

Over the last 38 calendar years, the average intra-year drop was -14%. In other words, even if markets were to fall by an additional 5 to 6% from yesterday’s level in the coming weeks, it would be still be considered a perfectly “normal” intra-yearly correction.

So what drove the sell-off?

I’ve heard some say that yesterday was an “interest rate sensitive” sell-off as a result of rising bond yields last week. Data doesn’t really support that as treasury yields actually fell yesterday and the worst performing stock sectors included technology, which is not an interest rate sensitive sector.

Is it stocks valuation? Valuation does not drive short-term prices. If it did, we would have seen this sell-off already at some point the last 12 months, since valuations were already well above historical average.

I know we want to always have a reason for large intraday moves, but sometimes there is no good reason.

Source: The Economist

Should we worry going forward?

Ok, the recent sell-off is not something we see every day, but it is also not something that has never happened before, so where do we go from here? Should we be worried? It depends on who “we” is.

  • Are you a day-trader? Then, yes you should worry as this means your job might be at risk if you were positioned long in this market.

  • Are you a 40-year-old doctor in Illinois that invests towards

    retirement

    ? Then today’s sell-off should mean absolutely nothing. If anything it means that expected returns on the equity part of your portfolio now look a little bit brighter, since it lowers the average cost of the

    stocks in your portfolio

    , which you will be buying for the next few decades.

  • Are you a 65-year-old retiring this year? This means it’s important that you have a steady hand and do not make drastic moves based on the last few days’ price action.

The key message here, no matter who you are is this: Turn off the TV. Take a deep breath. As I mentioned today on CNBC, don’t let the stock market short-term volatility dictate your strategy. Don’t have a strategy yet? It’s probably a good idea to schedule some time with an advisor to make sure you align your goals with a well-thought-out investment plan.

We as humans are hardwired to believe in a story. Any story that has enough information to give us an adequate illusion of control. This human bias has gone into overdrive as the past few days have not been good for the stock market. If you combine last Friday and yesterday’s sell-off, the S&P 500 index was down -6.1% in total. Not to our surprise here at Zoe, we got a rush of inbound questions from our community, so I figured it was worth addressing it.

Is this sell-off a big deal? Yes and no.

Source: Wall Street Journal

Yes - if we look at the daily move in isolation.

Volatility, measured by the VIX index, went above the 45 level mark, which has only occurred 91 times since 1990 (or 1% of the time). If we look at the S&P 500 index, there have only ever been 144 days in its history that saw -4% drops. So yes, yesterday was undoubtedly a big daily drop. Having said that, I hear a lot of noise about the Dow Jones Index had the biggest point drop ever. However, absolute point changes do not really tell us anything. In percentage terms, the Dow fell -4.6% today, which doesn’t even put it on the top 50 list of all time. Just to put that number into context, on Black Monday on Oct 19, 1987, the Dow index fell -22.6%.

No. If we look at the sell-off from a yearly perspective, the sell-off looks, well, fairly normal.

Over the last 38 calendar years, the average intra-year drop was -14%. In other words, even if markets were to fall by an additional 5 to 6% from yesterday’s level in the coming weeks, it would be still be considered a perfectly “normal” intra-yearly correction.

So what drove the sell-off?

I’ve heard some say that yesterday was an “interest rate sensitive” sell-off as a result of rising bond yields last week. Data doesn’t really support that as treasury yields actually fell yesterday and the worst performing stock sectors included technology, which is not an interest rate sensitive sector.

Is it stocks valuation? Valuation does not drive short-term prices. If it did, we would have seen this sell-off already at some point the last 12 months, since valuations were already well above historical average.

I know we want to always have a reason for large intraday moves, but sometimes there is no good reason.

Source: The Economist

Should we worry going forward?

Ok, the recent sell-off is not something we see every day, but it is also not something that has never happened before, so where do we go from here? Should we be worried? It depends on who “we” is.

  • Are you a day-trader? Then, yes you should worry as this means your job might be at risk if you were positioned long in this market.

  • Are you a 40-year-old doctor in Illinois that invests towards

    retirement

    ? Then today’s sell-off should mean absolutely nothing. If anything it means that expected returns on the equity part of your portfolio now look a little bit brighter, since it lowers the average cost of the

    stocks in your portfolio

    , which you will be buying for the next few decades.

  • Are you a 65-year-old retiring this year? This means it’s important that you have a steady hand and do not make drastic moves based on the last few days’ price action.

The key message here, no matter who you are is this: Turn off the TV. Take a deep breath. As I mentioned today on CNBC, don’t let the stock market short-term volatility dictate your strategy. Don’t have a strategy yet? It’s probably a good idea to schedule some time with an advisor to make sure you align your goals with a well-thought-out investment plan.

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Disclosure: This page is not investment advice and should not be relied on for such advice or as a substitute for consultation with professional accounting, tax, legal or financial advisors. The observations of industry trends should not be read as recommendations for stocks or sectors.


Investment advisory services are provided by Zoe Financial, Inc. (Zoe Financial), an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training. Learn more about Zoe Financial on the SEC’s Investment Adviser Public Disclosure website. Brokerage services are provided by Zoe Securities LLC and Apex Clearing Corporation, members of the Financial Industry Regulatory Authority Inc. (FINRA) and Securities Investor Protection Corporation (SIPC). Learn more about Zoe Securities and Apex on FINRA’s BrokerCheck website.

The information in the visuals above is for illustrative purposes only and does not represent an actual user's account, balance, or return. Zoe Financial does not provide tax or legal advice.

Explore the Zoe Wealth Platform with AI

Some of this content may have been generated with the assistance of AI. Please review and sense-check all outputs, as AI tools can occasionally produce incomplete or inaccurate information.
In certain situations, you may be required to disclose that the content was “generated by AI.” Please confirm any specific disclosure or labelling requirements with Compliance.

(646) 680-9244

support@zoefin.com

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New York, NY, 10017

Copyright © 2026 Zoe Financial, Inc. | All rights reserved

Disclosure: This page is not investment advice and should not be relied on for such advice or as a substitute for consultation with professional accounting, tax, legal or financial advisors. The observations of industry trends should not be read as recommendations for stocks or sectors.


Investment advisory services are provided by Zoe Financial, Inc. (Zoe Financial), an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training. Learn more about Zoe Financial on the SEC’s Investment Adviser Public Disclosure website. Brokerage services are provided by Zoe Securities LLC and Apex Clearing Corporation, members of the Financial Industry Regulatory Authority Inc. (FINRA) and Securities Investor Protection Corporation (SIPC). Learn more about Zoe Securities and Apex on FINRA’s BrokerCheck website.

The information in the visuals above is for illustrative purposes only and does not represent an actual user's account, balance, or return. Zoe Financial does not provide tax or legal advice.

Explore the Zoe Wealth Platform with AI

Some of this content may have been generated with the assistance of AI. Please review and sense-check all outputs, as AI tools can occasionally produce incomplete or inaccurate information.
In certain situations, you may be required to disclose that the content was “generated by AI.” Please confirm any specific disclosure or labelling requirements with Compliance.

(646) 680-9244

support@zoefin.com

666 Third Ave, 6th Floor
New York, NY, 10017

Copyright © 2026 Zoe Financial, Inc. | All rights reserved

Disclosure: This page is not investment advice and should not be relied on for such advice or as a substitute for consultation with professional accounting, tax, legal or financial advisors. The observations of industry trends should not be read as recommendations for stocks or sectors.


Investment advisory services are provided by Zoe Financial, Inc. (Zoe Financial), an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training. Learn more about Zoe Financial on the SEC’s Investment Adviser Public Disclosure website. Brokerage services are provided by Zoe Securities LLC and Apex Clearing Corporation, members of the Financial Industry Regulatory Authority Inc. (FINRA) and Securities Investor Protection Corporation (SIPC). Learn more about Zoe Securities and Apex on FINRA’s BrokerCheck website.

The information in the visuals above is for illustrative purposes only and does not represent an actual user's account, balance, or return. Zoe Financial does not provide tax or legal advice.

Explore the Zoe Wealth Platform with AI

Some of this content may have been generated with the assistance of AI. Please review and sense-check all outputs, as AI tools can occasionally produce incomplete or inaccurate information.
In certain situations, you may be required to disclose that the content was “generated by AI.” Please confirm any specific disclosure or labelling requirements with Compliance.

(646) 680-9244

support@zoefin.com

666 Third Ave, 6th Floor
New York, NY, 10017

Copyright © 2025 Zoe Financial, Inc. | All rights reserved