Jasmine Birtles
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Everyone’s Selling, But Why? What This Says About Investor Mindset in 2025
Ruby Layram
7th Oct 2025
If you’ve glanced at the financial headlines lately, you might have noticed something that doesn’t quite add up.
Stock markets around the world have been hitting record highs, yet investors are running for the exits.
According to the latest figures from Calastone, investors withdrew a record £3.6 billion from equity funds in the third quarter of 2025, the biggest outflow in over a decade. That’s despite strong corporate earnings, falling US interest rates and, on paper at least, one of the most supportive market backdrops we’ve seen in years.
So, what’s going on?
Why are so many people selling just as markets appear to be thriving?
In this post, I’m going to explain what this says about investor psychology, and what you can do to stay calm (and maybe even profit) when the crowd gets jittery.
About the author
Ruby is our resident investment editor and a first-class Psychology graduate. When she’s not creating content about the markets, she’s reading up on the subconcious mind and human behaviour- this article is the perfect mash of her two interests!
The Fear Paradox: When Good News Feels Bad
Here’s the thing, markets move on expectations, not just data. When everything looks “too good”, investors start to get nervous, wondering how long the good times can really last.
After all, the last few years have trained many of us to expect the worst. We’ve lived through pandemics, inflation spikes, interest rate hikes, political chaos, and cost-of-living shocks. So even when conditions improve, it’s hard to shake that “waiting for the next shoe to drop” feeling.
In other words, optimism fatigue is a real thing!
Investors aren’t necessarily reacting to the numbers, they’re reacting to emotional scars left by years of uncertainty.
Also read: 5 mindset traps that are stopping you from becoming a millionaire
Why We Panic When Things Go Well
When markets rise sharply, two psychological forces kick in:
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Loss Aversion: We fear losing money far more than we enjoy making it. So when markets look “toppy”, many investors cash out early just to avoid potential regret later.
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Recency Bias: We assume the future will look like the recent past. After a few years of wild swings, it’s no surprise that many still expect another correction around the corner.
These instincts are perfectly human, but they often lead to selling too soon, buying too late, and missing long-term gains.
What the Smart Money’s Doing
While retail investors have been selling, large institutional investors often view these moments as opportunities.
When fear dominates, prices of high-quality companies can fall below their fair value, and that’s where long-term investors quietly step in.
The real question isn’t “is a crash coming?” but rather “are we positioning ourselves for resilience, no matter what happens next?”
How to Stay Grounded During Market Madness
Here are some simple but powerful moves to keep your head when everyone else is losing theirs:
- Stay diversified. Don’t rely too heavily on one region or sector. A mix of equities, bonds, and alternative assets (like gold or commodities) helps cushion against volatility.
- Reinvest, don’t react. If you’re investing for the long term, automatic reinvestment of dividends or regular contributions can smooth out market timing mistakes.
- Look beyond headlines. Outflows don’t always mean markets are doomed, sometimes they’re a reflection of short-term emotion, not fundamentals.
- Focus on time, not timing. The longer you’re invested, the less market wobbles matter. Historically, time in the market beats trying to guess when to get in or out.
Final Thoughts
Markets and moods are closely linked, and right now, it seems sentiment is struggling to catch up with reality.
Selling during a boom might feel sensible, but it’s often emotion masquerading as logic. The savviest investors know that patience, discipline, and a calm head tend to win over panic and prediction.
So before you hit “sell”, ask yourself: Are you reacting to numbers, or to nerves?
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Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here, including opinions, commentary, suggestions or strategies, are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence. When investing your capital is at risk.
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