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Should You Sell Off Stocks Due to the Omicron Variant?

By Maurie Backman – Dec 3, 2021 at 6:36AM

Key Points

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You may be tempted to take action in light of the latest COVID-19 development. Here's what you need to know.

At this point, a lot of people are experiencing pandemic-related fatigue. We're tired of wearing masks, having to practice social distancing, and hearing negative news on the COVID-19 front. So the recent discovery of the omicron variant is clearly the last thing a lot of people need right now.

At this point, it's unclear as to how much of a game changer the omicron variant has the potential to be. While initial evidence shows that the variant is highly transmissible, we don't know if it causes more severe disease. Similarly, we don't know how effective our existing array of COVID-19 vaccines are at attacking it.

Person with serious expression at laptop and holding phone to ear.

Image source: Getty Images.

But one thing we do know is that the stock market has already experienced its share of turbulence this week in light of the omicron news. And that may be a scary thing for investors to stomach.

But should you dump your stocks due to omicron variant fears? The answer is actually pretty simple.

Stay the course

This week's stock market sell-off is pretty directly tied to the emergence of the omicron variant. But this is also a situation we've been in before.

In March of 2020, stock values tanked as the pandemic hit U.S. soil and it quickly became clear that COVID-19 wasn't something the world would manage to contain. But that bear market was extremely short-lived.

By the summer of 2020, stocks had managed to recover from their lows earlier in the year. All told, stocks gained a lot of value in 2020 despite their substantial dip in March.

It's for this reason that investors shouldn't react to the recent omicron variant sell-off. While the new variant could cause some near-term upheaval, that upheaval ultimately may be short-lived the same way our last bear market didn't last very long. And even if omicron-related volatility persists well into the new year, stocks are still likely to recover their value and then some in the long run.

That's why you absolutely shouldn't be rushing to get rid of your stocks in light of this recent news. In fact, if anything, now may be a prime opportunity to buy more stocks since the market is down. If you have cash on hand and have a fully loaded emergency fund, it pays to take some of that money and scoop up discounted stocks on your wish list.

Don't panic

It's too soon to know what the omicron variant means in terms of the pandemic. And to be clear, the variant could have a negative impact on the economy -- especially if it forces business closures and worsens the supply-chain bottlenecks that have been plaguing retailers for months.

But from an investing perspective, one of the most important things to do right now is avoid panic and leave your stocks alone. If you sell stocks at a loss, you're guaranteed to be down money, whereas if you wait things out, you may not lose a single dime during these turbulent times.

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