How Americans Panic Sell When Stock Markets Drop

Investing in the stock market to my way of thinking is an acquired taste. I used to think that investing in the stock market was just a higher form of gambling. I don't necessarily feel that way now, but I have a feeling that luck as well as knowledge combined make for a good investor.

My dad made a few investments including gold, and he also had stock investments in a product called Astrolite. Dad was an aerospace engineer, and he was fascinated by anything technical. Astrolite at that time was a newly invented two-part liquid explosive. Some call it "the liquid landmine". Others called it a "liquid trench".

How did it work?

If you wanted an instant trench, you would just take the materials in liquid form and pour them out in a line in the shape of the trench that you want. You place two electrodes in the ground, throw an electric charge through those electrodes and boom, you have a ditch.

These days there are other possible liquid explosives that are cheaper and safer to use. I have no idea if dad made any money off of those investments.

If you've ever watched the movie Dumb Money. (A true story, by the way.) You know that retail investors like you and me don't necessarily make a lot of money in the market without some really sharp advice.

Youtube / https://youtu.be/bmr8YmwnZ3w?si=931QdyF7uAWSv5Mx

What happens when the market drops?

Marketwise.com did an interesting study,
‘MarketWise analyzed three years of Google search behavior across 100 cities, from July 2023 through June 2026, and surveyed 1,007 U.S. investors to see when market anxiety turns into action. The results reveal how far stocks must fall before investors sell, where investors are most nervous about a crash, and how concerns about an AI bubble are influencing portfolios.’

One bit of information they came up with was that the average American didn't start panic selling their investments until the market had dropped approximately 18%.

The survey also noted that about 53% of Americans believe that the market right now is in an "AI bubble". One in four of those investors has already reduced their holdings in Tech and AI.

What cities are most likely to panic?

Another interesting statistic that the survey came up with was what cities (In general) are most likely to panic in a market downturn.

Of the 25 cities listed in the survey, the number one city with residents most likely to panic sell is Atlanta, GA. Roughly 7500 citizens per 100,000.

St. Louis, MO, Orlando, FL. And Minneapolis is also on the list in descending order.

The number 5 city on that list? Seattle, approximately 5700 people and 100,000 would panic sell?

Keep in mind that all of these statistics were derived from surveying Google searches over the last three years. (In my opinion, not very scientific, but still interesting.)

One of the scariest bits of information that comes out of this survey is something that I just can't relate to. Basing financial moves on what you see on TikTok.

"1 in 10 investors has sold a stock or other investment because of something they saw on TikTok. Gen Z investors were the most likely to have done so, at 18%, compared to millennials (10%) and Gen X (7%).”

I don't know why, but that kind of thinking just drives me bonkers. I guess that makes me old.