Do Investors Sell for the Right Reasons or Simply to Relieve Discomfort?

Updated November 2025

Alpesh Patel, 

Financial Times columnist Diary of an Internet Trader (1999-2004)

Introduction

In financial theory, investors sell assets when fundamentals deteriorate, valuations overshoot, or opportunity costs change. In practice, they sell for a far simpler reason: it feels better.

The disjunction between rational decision-making and emotional relief is one of the most persistent failures in personal finance. Despite decades of data proving that long-term holding and disciplined rebalancing outperform impulsive trading, the average investor behaves as if the primary purpose of selling is not to optimise returns but to extinguish discomfort.

This essay argues that investors rarely sell for the right reasons. Most selling is driven by behavioural pressure; fear, boredom, regret, the discomfort of volatility, or the need to “do something.” Rational selling, by contrast, is remarkably rare and requires an unusual combination of patience, clarity and discipline.

Understanding the tension between discomfort relief and evidence-based decision-making reveals the real challenge in investing: not analysis, but emotional governance.

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Why Investors Sell: Emotion vs Strategy

Most investing textbooks present selling as a rational, analytical decision. But most real-world selling is emotional, impulsive, and relief-driven. Investors rarely pause to ask whether the world has changed, only whether their feelings have changed.

The Hidden Psychological Drivers Behind Selling

Fear, Regret, and Emotional Relief

Behavioural finance provides the clearest answer to why people sell: it feels good to stop feeling bad.

Loss aversion, described by Kahneman and Tversky, explains why investors hate losing far more than they enjoy winning. When a stock falls, the psychological pain grows faster than the statistical significance. Selling then becomes emotional anaesthetic - a way to halt the feeling of loss, even if it cements it financially.

Regret aversion also pushes investors to act prematurely. They fear looking foolish if losses deepen, so they sell to avoid future self-reproach. Ironically, this same bias stops them from selling losers early enough when fundamentals truly collapse.

Action bias is perhaps the most powerful. Humans feel safer doing something than doing nothing - even when inactivity is the optimal strategy. Selling creates the illusion of control, the comforting sense that one is “taking charge,” even if the decision worsens long-term outcomes.

In short, the act of selling often satisfies psychological needs more than financial ones. It reduces anxiety, not risk.

Why Volatility Feels Like Danger; Even When It Isn’t

Volatility is not risk, but to the human mind it feels indistinguishable from danger.

Long-term investors say they can tolerate swings, but when a portfolio drops 15% in a month, discomfort suddenly becomes intolerable.

Many sell not because they believe the world has structurally changed, but because living with uncertainty is emotionally exhausting.

This is why recessions destroy less wealth than panic.

The market may fall 20%, but the average investor’s portfolio falls 35% - because they exit at the bottom and re-enter late.

Dalbar’s 2023 study shows this behaviour penalty costs investors 1.7% per year over three decades — far more than fees or economic downturns.

Thus, selling becomes the emotional release valve for internal discomfort, not a reflection of external conditions.

Boredom - The Silent Destroyer of Wealth

A subtler but equally destructive force is boredom.

In long periods of sideways markets, investors feel stagnant and begin seeking stimulation. Selling a stable but dull stock to chase a “more exciting” one is not analysis - it is the financial version of fidgeting.

Nietzsche observed that humans would rather will nothingness than not will. Markets illustrate this perfectly: investors would rather ruin a portfolio through frequent tinkering than tolerate the psychological discomfort of stillness.

The Great Investments Programme (GIP) recognises this. Its evidence-based philosophy teaches that long-term compounding is inherently uneventful - wealth creation is often boring, while wealth destruction is thrilling.

What Selling for the Right Reasons Actually Looks Like

Selling for the right reasons requires a rare quality: the ability to separate internal feelings from external facts.

Rational Selling Occurs When:

1. The investment thesis breaks - fundamentals deteriorate significantly.

2. Valuation becomes extreme relative to intrinsic value.

3. Better opportunities exist with superior risk-adjusted prospects.

4. Portfolio balance needs restoring - systematic rebalancing, not emotional reaction.

5. Risk tolerance or financial goals change - not out of fear, but clarity.

These reasons are analytical, not emotional. They require preparation, not impulse. They occur on timeframes of months or years, not minutes or hours. Most investors know these principles, yet few apply them because discomfort overwhelms discipline.

How Structure Prevents Behaviour-Driven Selling

Good investing systems like those taught in the GIP; exist to protect investors from themselves. They replace emotional decision-making with rules, models, and checklists.

How the GIP Helps Investors Avoid Emotional Selling

• Pre-defined sell criteria prevent fear-based selling.

• Annual rebalancing channels action into discipline rather than panic.

• Stress-testing tools reduce anxiety by showing historical scenarios.

• Quality and Sortino filters reassure investors that volatility ≠ danger.

• Education through webinars reframes downturns as natural, not catastrophic.

By externalising the decision process, GIP removes the emotional burden. Investors stop selling for relief and start selling only for rationale.

When Emotion Is Rational - The Exceptions

A fair analysis acknowledges that discomfort is sometimes warranted.

If anxiety arises from overexposure, illiquidity, or misunderstanding, selling may be the rational path. Psychological relief is not always irrational - it may indicate that risk levels exceed an investor’s authentic tolerance.

But this still represents a failure of portfolio construction, not sound strategy.

When discomfort becomes the trigger rather than the signal, it undermines the entire compounding journey.

The Market Tests Your Portfolio, Volatility Tests Your Temperament

In the overwhelming majority of cases, investors sell for the wrong reasons. Selling is used as emotional pain relief, not financial strategy.

Fear, restlessness, and the craving for control drive more exits than broken fundamentals or rational rebalancing.

The real challenge of investing is therefore not identifying what to buy or sell, but learning when to ignore yourself.

Programmes like the Great Investments Programme reshape this battle: they train investors to replace discomfort with discipline, confusion with structure, and impulse with evidence.

The market tests your portfolio.Volatility tests your temperament.The investor who fails the second test never passes the first.

Next Steps: Build Evidence-Based Discipline

If you want deeper clarity and structure around investing decisions, explore:

• The Great Investments Programme (GIP): evidence-based rules for disciplined investing.

• The GIP Tools Suite: stress tests, compounding calculators, and portfolio checkups.

  (campaignforamillion.com/tools)

Disclaimer: This article is for general information and educational purposes only and does not constitute financial advice. Past performance is not a reliable indicator of future results. Investment decisions should be based on your individual circumstances, and you should consider seeking guidance from an FCA-authorised financial adviser if you require personalised advice. Alpesh Patel OBE www.campaignforamillion.com