Sell-Off

A term used to describe a sharp, swift decline in a security’s price. However, this term is overused. It is used to describe a 2% decline in a broad market average in one day, or a 10% decline in a commodity over a week.

A security may sell off due to adverse news or for little reason (random fluctuation due to buying/selling.)

Like the term “hot hand” used by basketball commentators, the term “sell-off” is usually only commentary of little meaning. While it does sound a bit appalling that stocks have “sold off”, it is usually nothing more than a random fluctuation.  However, this does not make it wise to buy when the market sells off, as all bear markets begin with a sell-off and continue with successive selloffs as well.