Two oil tankers were struck by projectiles in the Strait of Hormuz late Monday, and Dow futures softened overnight into Tuesday's session. Brent crude has climbed to above $92 a barrel since Sunday. For millions of retail investors watching the headlines, the instinct to sell first and ask questions later is about to be tested again.
New research from Allianz Life's 2026 Annual Retirement Study, fielded in January among 1,000 US adults, found that 34% of investors typically withdraw money to avoid further losses once a significant market drop is underway. The number is not evenly distributed. Millennials pull money out at a rate of 67%, more than eight times the 8% rate reported by boomers.
The Mechanism Behind the Instinct
Daniel Kahneman and Amos Tversky named this pattern loss aversion in their 1979 paper on prospect theory. Their finding was specific: the psychological pain of a loss registers roughly twice as strongly as the pleasure of an equivalent gain. A portfolio down 10% does not feel like the mirror image of a portfolio up 10%. It feels considerably worse.
That asymmetry is what drives the sell decision. It is not innumeracy, and it is not a failure to understand that markets recover. It is a wired-in overweighting of the loss relative to the gain sitting in the same account a week earlier.
The Investors Who Can Least Afford to Sell
The generational skew compounds the problem rather than offsetting it. Millennials hold the longest investment horizon of any cohort in the Allianz data, the group with the most time for a drawdown to resolve itself. They are also the group selling at the highest rate.
The same survey found that 57% of Americans feel anxious about their financial future when retirement accounts suffer losses, and millennials check their account balances during volatile stretches at nearly twice the rate boomers do, 67% versus 39%. Frequent checking is itself a risk factor: each glance at a falling balance is another chance for loss aversion to trigger a sell decision it would not have made a week later.
The cost is measurable. Allianz's research found that investors who withdrew during a downturn missed an average of 27% in gains over the following twelve months, a period in which the S&P 500 recovered and then extended its advance. The chart below sets the generational gap against that missed-gains figure.
Findings are drawn from a nationally representative survey of 1,000 US adults fielded in January 2026. Investors who sold during a prior downturn missed an average of 27% in the subsequent twelve months.
Why the Recency Bias Makes This Week More Dangerous
The Strait of Hormuz conflict has run for roughly six months, oscillating between quiet stretches and sudden escalations like Monday's tanker strikes. Each new flashpoint arrives freshest in memory, which is precisely what the availability heuristic predicts: the most recent, most vivid piece of information gets weighted far more heavily than the underlying base rate would justify.
Six months into a conflict that has repeatedly de-escalated and re-escalated, the base rate says this pattern is more likely to continue than to resolve in either direction this week. That is not the story that Monday's US strikes on Iran's Larak Island and Iranian retaliation against bases in Jordan are telling on their own.
Canadian portfolios carry a heavier energy weight than most developed-market peers, which means the emotional charge of an oil-driven headline lands differently on a TSX-heavy account than on a diversified US one. The psychology documented in the Allianz research is universal. The exposure that makes it costly is not.