Ever wondered why 401(k) holders shouldn’t panic during stock market slumps? Well, we were just served the perfect lesson on a platter.

U.S. stock markets tumbled on April 4, as investors grappled with President Donald Trump’s new tariff plan, mounting fears of a global trade war and growing concerns of a recession. The Dow Jones Industrial Average dropped over 2,200 points, or 5.5 percent. The S&P 500 sank nearly 6 percent. And the Nasdaq composite plummeted 5.8 percent, putting it in bear market territory with the index down over 20 percent from its record high. Those declines come on the heels of sharp sell-offs on April 3, triggered by Trump’s tariff announcement.

You can be the bridge to hope and joy. With your gift, Wish of a Lifetime® from AARP (an affiliated charity) can grant more wishes, sparking hope and joy to last a lifetime.

“Negative news sells, because people are looking for things to worry about,” says Dan Egan, director of behavioral finance at investing platform Betterment. “When negative news happens, we tend to pay a lot of attention to it, like the market dropping 5 percent in a day. But if the market goes up, it doesn’t get as much fanfare, because our natural predilection is to look for scary things.”

It’s a perfectly human reaction. You see panic all around you; you see your net worth declining in real time; you get spooked. You want to preserve everything you have worked so hard for. Some people even experience a physiological reaction to financial news during periods of turbulence, with researchers drawing a connection between negative stock market information and anxiety.

We like to think of ourselves as perfectly rational beings, but we’re really not. We are susceptible to all sorts of biases, which can lead us to make poor financial decisions. In fact, there is an entire field of research, called behavioral economics, that tries to decode why we make the financial decisions we do.

Read more and link to the original article here.