Your brain has only one goal, to ensure your survival. It is constantly on the lookout for dangers or threats to better protect you from harm. Your brain is conditioned to respond more strongly to negative stimuli.

This is why bad news can cloud your judgement. By the time you have read this article, there will be more bad news. The question is: should you sell? Generally, the answer is no! This is not the correct answer for the long-term investor as long as the company is doing just fine and you believe in the company. Every time you sell, you create a buying opportunity for someone else. If there is bad news and everyone sells, then it is not good news for anyone who bought after that point in time. The same goes for stocks with high dividends, they will stop paying out those dividends, so every time you sell them, you are also selling their future payouts as well.

Bad news clouds your judgement.

You may think you're making a rational decision, but the news could have clouded your judgement. You may be acting on emotion rather than logic, and you might be making a bad decision. Following the herd might not be the best decision out there; just remember, the sellers might get affected by the bad news and try to save their investments, causing more drops in the prices. As long as I trust the company I own, this means one thing, shopping time!

It's not just that the bad news makes you upset or angry—it also makes it harder for you to think clearly about what needs to happen next. Your mind might jump straight to an emotional response, like telling yourself, "I'm going to lose everything!" instead of considering all other possibilities or talking with someone who could help calm down and think things through with clarity.

Social media has lots of doom and gloom news all the time. If you find yourself listening to those updates, you might miss the big picture.

Generally, I always take the bad news with a filter. As statistics show, the stock market has historically increased over time. This means that even if you lose money in one year (or even a few years), you will likely make it back and more over time. It's important to remember that the stock market is a long-term game, not short-term speculation!

You will have to fight off the urge to sell.

If you have held a stock for some time and it is now trading at a much lower price, you may want to sell. This actually might be a bad move because it means giving up your dividends, capital gains and tax loss. These are all essential things that help keep your portfolio stable through the ups and downs of the market.

So what should you do instead? If there is bad news about a stock, it's best to keep holding onto it as long as you believe in the technical analysis of the company you hold. This will help ensure you won't lose out on any potential upside down the road.

Never forget, unless you sell a losing stock, you have not realized the loss yet.

Every time you sell, you are creating a buying opportunity for someone else

There is only one reason I like the bad news on the companies I hold. It makes other investors panic, and they sell the shares, which creates a buying opportunity for me. I am not saying do not sell stocks, there are cases where you should close your position if you have made a wrong decision.

I learned this the wrong way. I fell in love with the company itself so I kept my position even when they were losing. My technical analysis was barking at me, but I ignored it and kept holding with losing my investment. Therefore, your analysis matters much more than some random ideas online.

You are not only selling the stock but also the dividends.

Dividends are a portion of a company's earnings that is returned to shareholders as payment for their investment. Bear in mind that dividends are not guaranteed.

A company can reduce or eliminate dividends at any time. Therefore it is important to consider the risk that you may not receive any dividend payments in the future. Hopefully, there are tools to see the dividend history of a company you own and how historically they increased (or decreased) their dividends.

There are some taxes on dividends. This is a long topic which I will cover in a separate post. You would want to consider and plan ahead of your taxes when investing.

Don't sell when there is bad news.

Selling when there is bad news or the stock market is down can be very tempting. When we are scared or in panic, we tend to choose flight over fight, this is perfectly natural. To overcome wrong decisions, it is good to have a goal prepared for your next short, mid and long-term investment plans.

Remember that these tips are only guidelines, and they may not apply in every situation.

• If the company you own has introduced new products or services, these can bring about growth in sales or profits for the company. This will increase the value of its stock price over time, so it may be a good idea to hold onto your share instead of selling now (or at least wait until you've had time to research more).
• If one of your stocks is performing poorly compared with others within its sector/industry, then it might make sense if not just yet but perhaps later to look into whether this is due to any underlying factors (e.g., poor management etc.) which could either result in turnaround prospects or perhaps even better-than-expected performance going forward which would mean buying back into said shares after some investigation has been done!
• If a company's stock price rises, this might not be because of its financials. A social media trend might be causing this therefore be careful while following the hype. You might end up owning a stock which might lose its value as fast as it gained it.
• You need to consider the long-term value of a company. Your goal should be to buy stocks that will increase value, not just for short-term profit. Buy stocks with a solid financial position - such as strong earnings, low debt and high cash flow - that are reasonably priced relative to their peers but also have growth opportunities. This might mean looking at companies operating in rapidly growing markets or those that can adapt quickly to changing environments.
  

The next time there is bad news, don't panic and don't sell straight away! First, remember your reasons for buying that stock, then redo your math on their financials. If they look okay, then wait and see what happens. If the situation improves, then you can buy it back in at a lower price than you sold it for. The key is to keep your emotions out of it. If the stock price is down because of bad news, it's a great opportunity to buy more. If you're right about the company and they turn things around, you'll have bought in at a low price.