Tanking

"Tanking" is slang for when a stock, market, or other investment experiences a sharp, significant decline in value. The term evokes the image of something sinking or plunging, like a tank or a ship going down. When people say a stock is tanking, they mean it's falling rapidly and substantially. Stocks can tank for various reasons. Poor earnings reports, negative news about the company, adverse industry developments, or broader market selloffs can all trigger sharp declines. Some tanks happen suddenly and dramatically, while others unfold over days or weeks as sentiment deteriorates. Individual stocks tank more frequently and dramatically than broad market indices because company-specific risks can cause isolated plunges. A single bad product, regulatory problem, or management scandal can devastate a stock while the market as a whole remains stable. Diversification helps protect investors from the impact of any single stock tanking. Markets as a whole can also tank during crises. The COVID crash of March 2020 saw the S&P 500 decline about 34% in roughly a month. The 2008 financial crisis caused markets to tank over several months. These broad tanks affect nearly all stocks and can be psychologically challenging for investors. What to do when your investments are tanking depends on the cause and your circumstances. If a stock is tanking due to a fundamental deterioration in the business, selling might be appropriate. If the market is tanking due to temporary panic, holding or even buying more might be the right move for long-term investors. Panic selling during temporary tanks often leads to selling low and missing the recovery. Understanding that tanks happen - and will happen again - is part of being a mature investor. Having a plan in place before prices decline helps prevent emotional decision-making during the stress of watching your portfolio value drop.