A period of market activity that is distinguished by a rapid decline in stock prices, leading to enormous investing losses. Bloodletting often takes place when investors face a bear market in a given stock or sector or across the board. As bloodletting happens unexpectedly, some investors may be panicked and prefer to sell off their holdings before things get worse. Long-term investors, on the contrary, may favor a different course of action, clinging whereby onto their investments in the hope that market conditions get back to normal again without having to bear uncalled-for short-term losses.
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