If You Left the Stock Market in March, Is It Time to Jump Back In?
Lots of investors sold stocks during the downturn. How do they get back in the market now? And should they?


Following the Great Recession 11 years ago, I wrote an article called “Proaction after Reaction,” which guided investors on how to get back into the market, if they pushed the panic button and sold their stocks during the 2008/2009 downturn. I’m seeing this same situation play out again.
According to a recent Fidelity Investments study, of the investors age 65 and up who made changes to their portfolios during the downturn in February and March, one-third sold some of their stock holdings. For all age groups, nearly one in five — 18% of investors — who made changes to their portfolio during this time frame sold some stocks.
Much like today, some people 11 years ago thought the sky was falling. Back then the stock market was in turmoil, banks were failing, unemployment rose sharply and experts predicted an economic recovery would be years in the making.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
On March 9, 2009, the Standard & Poor’s 500 index hit a 10-year low. But from that point through Dec. 31, 2009, about nine months later, it climbed more than 67%. From then through the end of 2019, the S&P 500 index was up 498% from its March 2009 low.*
During the past several weeks, the stock market has recovered significantly from its low on March 23, 2020. As of July 17, the S&P 500 is up about 1% for the year, while the Dow Jones Industrial Average is down 5%.* From their March 2020 lows, these indexes have each climbed about 45%.
While the factors causing the recession in 2008/2009 are different than those that we’re seeing today, I’ve found much of the advice I wrote about 11 years ago still applies today. If you sold out of your stocks these past few months and have missed this current rebound, here’s some advice to get back on track:
Understand What Caused You to Hit the Panic Button
Selling out of stocks while they are temporarily down is usually triggered more by emotion than facts and data. What caused you to get spooked? Did you lose your job? Was your business forced to close temporarily due to COVID-19? Did you have too much tied up in stocks and were too aggressively invested coming out of the strong 2019 bull market? Or did your worldview change?
If after assessing these past few months you truly believe the stock market is not a sound place to invest your money for the long term, or economics are so fundamentally different going forward that economies won’t rebound, that is important to understand, because you may never get back into stocks. If so, there are some long-term trade-offs you now need to accept and prepare for, such as:
- Living with an erosion of purchasing power due to inflation.
- Locking in permanent losses in your portfolio.
- Having less to spend in retirement.
- Possibly having to work longer.
On the other hand, if after selling you decided you want to sit on the sidelines for a while until “things calm down,” that can be equally problematic. Once the stock market stabilizes, it’s usually too late to recover the losses you locked in. Investing in stocks is a marathon and not a sprint, and you need to be in for the long haul to reap rewards.
Evaluate Your Cash in the Bank
If you are working: You need at least three to six months of living expenses in cash in the bank. This helps weather the inevitable storms we face during life, and job loss is one of them. If you bailed out of your portfolio because you lost your job, took a big cut in pay or worried you may need to get your hands on cash quickly, now is the time to get your emergency fund set up. If three to six months doesn’t feel like it’s enough cash for your family’s comfort, bump that to 12 months by shifting cash that is in a taxable brokerage account to your savings account. Then, reinvest the rest of the brokerage account into a diversified portfolio.
For retirees or those approaching retirement: We typically recommend having one to three years of living expenses in cash in the bank. This allows retirees to turn off their portfolio withdrawals and live off their savings account when the stock market is down, giving time for markets to recover. Evaluate how long you can live off your cash, then add in the amount of bonds you own. Combined, these two conservative asset classes should cover your living expenses for five to 10 years in retirement — thus giving your stock portfolio time to weather the ups and downs.
Determine Your Ideal Mix of Stock and Bonds
If you recently went all to cash, there is still hope for your portfolio. If you hit the “reset button” now and put your portfolio back to a diversified mix of stocks and bonds, you can get back on track. If you were queasy watching the wild swings in the stock market in March, and that’s why you bailed out, consider whether you need a new mix of stocks, bonds and alternative investments this time around. You may need to be invested more conservatively than you were before, with less volatility. It’s best to own 10% or 20% less in stock now if that will help prevent you from making erratic shifts with your investments the next time we hit a bumpy road.
- For younger investors in their 20s, 30s, and 40s, who could have decades before they need to spend down their portfolios, we typically recommend the majority of their portfolio be in stocks.
- For those nearing retirement, adding in 10% to 20% in bonds makes sense, and those in retirement should typically have 20% up to 50% in bonds depending upon their cash-flow needs.
Overlaying this rule of thumb is the investor’s comfort level with ups and downs in their portfolio, which could dictate a need for more or less in stocks.
How to Get Back In – All at Once or Over Time?
Historically, stocks have been one of the best generators of wealth over time. From March 9, 2009, until Dec. 31, 2019, the S&P 500 generated an annualized return of 18%.* But investors need to be patient as stocks didn’t go straight up the past 11 years, they won’t likely go straight up from here, and there is risk of loss in investing.
For those who have decided the time is right to invest again, there’s another decision: Should they reinvest a portion of their cash, or all of it? When people pull the plug on their investments, they typically go to cash in a lump sum, rather than methodically dollar cost average their money out of investments. When you are ready to invest again, while it can feel more safe to dribble your cash back in, data shows it often makes sense to invest at all once.
A Vanguard study published in 2016 compared the historic performance of immediate and systematic investing across three markets: the United States, the United Kingdom and Australia. It compared a lump sum investment vs. a systematic plan that invested cash in a balanced 60% stock/40% bond portfolio in 12 equal monthly installments. The study evaluated the returns of both immediate and systematic investing across rolling 12-month historic periods.
In each market, the immediate investment led to greater portfolio values approximately two-thirds of the time. On average, the immediate investment outperformed a 12-month plan by a high of 2.39 percentage points in the United States and a low of 1.45 percentage points in Australia.
I understand that it may be difficult for investors to part with a large amount of cash at all once.
Taking a More Measured Approach
For those who aren’t comfortable investing a lump sum, create a disciplined program to invest the lump sum within a year. This structure ensures that cash is continually invested according to the target asset allocation while limiting the time the rest of your money sits idle.
For example, a person can divide their cash balance into monthly installments and invest in the portfolio according to their target asset allocation. Another example would be to immediately invest some cash in the less volatile fixed income portion of the portfolio and then gradually invest the rest of the cash in the more volatile equity portion using a systematic investment plan.
Next, know what point you bailed out of the stock market and how long you are willing to wait on investing the cash going back into a stock allocation, to see if the stock market drops back to that point again. Understand that the stock market may not decline again to the point you sold out, so your stock losses from earlier this year could be permanent.
To determine the right strategy for you, consider your time horizon, cash-flow needs and tolerance for volatility. If you’ve made some mistakes during this bear market, be sure to take the time to evaluate your next move carefully.
The stock market will continue to go up and down over the short term. But it should continue to trend upward over the long term. If you overreacted in this market and made an investing mistake, it’s time to be proactive and get yourself back on track.
*Morningstar Direct. Past performance is not an indication of future investment returns. Investors cannot invest directly in an unmanaged index.
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Lisa Brown, CFP®, CIMA®, is author of "Girl Talk, Money Talk, The Smart Girl's Guide to Money After College” and “Girl Talk, Money Talk II, Financially Fit and Fabulous in Your 40s and 50s". She is the Practice Area Leader for corporate professionals and executives at wealth management firm CI Brightworth in Atlanta. Advising busy corporate executives on their finances for nearly 20 years has been her passion inside the office. Outside the office she's an avid runner, cyclist and supporter of charitable causes focused on homeless children and their families.
-
5 Low-Cost Ways to Protect Against Identity Theft
SPONSORED Stay ahead of identity thieves and maintain your peace of mind with these simple, affordable steps.
-
Upgrades to the CBP Entry Process Ahead of Peak Summer Travel Could Streamline U.S. Border Entry for Travelers
Enhanced processing could make international travel into the U.S. smoother and easier this summer.
-
A Financial Adviser's Defense of Annuities: They're Just Misunderstood
Annuities can offer retirement income stability and security against market volatility, though some do have drawbacks. The key is to understand their features before buying.
-
Diversification: An Investment Adviser's Guide to Why You Need It and How to Achieve It
How confident are you that your money will go the distance? Building a balanced portfolio can shore up your investments' long-term stability.
-
How My Dad Taught Me the Compounding Returns of Fatherhood
As Father's Day approaches, I remember how my father's small acts of love and generosity added up over time and influenced my relationships with my own children, proving that the best investments can grow across generations.
-
Stock Market Today: Stocks Lose Steam After CPI, US-China Trade Deal
Wall Street initially cheered soft inflation data and hopeful tariff news, but momentum stalled in late-day trading.
-
Financial Professional's Key to Peace of Mind in Retirement: Income Planning
Creating guaranteed income sources in retirement will help you truly enjoy your golden years and spend less time worrying about money.
-
Don't Let a Market Crash Crush Your Retirement
It's a comfort to know that with the right strategies, you can weather just about anything a crazy stock market can throw at you.
-
Stock Market Today: Wall Street Is Standing By
The waiting is the hardest part with trade war truce talks underway and inflation data on the way.
-
Wealth Advisers: In Estate Planning, the End Is Just the Beginning
We need to keep the lines of communication with our clients open so that we can anticipate and help them navigate issues that arise over time.