You Bailed During The Stock Market Dip: 5 Moves To Make Now

April was a roller-coaster month for U.S. investors. The S&P 500 sank to its lowest point of the year April 8 — down 18.9 percent from its February peak — after President Donald Trump threatened new tariffs on Chinese imports.

But then the market rebounded just as quickly when Trump’s tariff threats were walked back a few days later.

The result? A textbook V-shaped recovery. By June 25, the S&P 500 was less than 1 percent off its all-time high and the index had erased all its April losses.

Investors who panicked and sold during the drop likely missed the recovery. And that’s a costly mistake.

A 2022 study from the Massachusetts Institute of Technology found that the median investor who panic sells earns zero or negative returns — and 30.9 percent of investors never return to risky assets.

You sold the dip, now what?

You saw your portfolio falling fast and hit the eject button. Now stocks are back up, and you’re sitting in cash, unsure whether to jump back in or wait for another dip.

This is where many investors get stuck. They miss a recovery and tell themselves they’ll buy in during the next dip. But the market doesn’t always give you a second chance. It tends to start rising while uncertainty still lingers, so investors waiting for a perfect reentry point often stay in cash much longer than they planned.

“The hard part is knowing when it’s safe to go back in,” says Jeff Arber, a CFP and founder of Triple Play Financial. “Because by the time it feels good, you’ve often missed most of the gains on the way back up.”

Good days tend to follow bad ones in the market — and the margin of error is slim. Seven of the stock market’s 10 best days happened within 15 days of the 10 worst days in the last 20 years, according to research from JPMorgan Asset Management.

An investor who sold and missed those top-performing days ended up with an average annual return of just 6.4 percent, compared to 10.6 percent for someone who stayed fully invested.

The truth is, panic selling is almost always a mistake. But you’ve probably realized that by now. The MIT study found most panic sellers (80.8 percent) only do it once.

We spoke with financial advisors to break down what to do next if you sold during the crash.

1. Dollar cost average your way back in

Rather than waiting for another dip or jumping back in all at once, Arber recommends easing back into the market with a dollar-cost averaging strategy. That means investing a fixed amount at regular intervals, regardless of market conditions.

This helps reduce the risk of reinvesting a lump sum right before another pullback.

One way Arber says you can approach this is to divide the total amount you want to reinvest by 12 and set that amount to automatically invest on the first of each month for a year.

“The key is to automate the process,” Arber says. “If you have to log in and make a decision to take action each month, it won’t work out for you. Set it up once, and then forget about it.”

Some investors prefer a hybrid method — putting in half now, then spreading the rest over a few months. If the market dips during that time, you can always allocate more.

“As an individual investor, you want to take advantage of favorable odds when you can,” says Kevin Feig, a CFP and founder of Walk You To Wealth.

A financial advisor can also help customize this plan based on your goals and risk tolerance.

2. Develop a long-term strategy and stick to it

If April shook your confidence as an investor, it’s time to build a strategy to withstand future market swings.

Feig says it’s critical to have a documented investment plan with clear goals in place.

“Some studies show you’re 40 percent more likely to achieve goals if they’re written down,” says Feig.

Moving forward, focus on building a diversified portfolio of quality companies or low-cost index funds — and commit to holding them through the inevitable ups and downs. Refer back to your written plan if you need a reminder.

Experts say it’s important to focus on fundamentals. That doesn’t necessarily mean analyzing balance sheets or quarterly earnings reports (though doing so certainly doesn’t hurt). For most investors, it’s about understanding the long-term value of what you own — and why you own it. If you believe in a company or fund over the next 10 or 20 years, then short-term noise shouldn’t rattle you.

You also want to maintain a portion of your portfolio in low-risk investments, such as Treasury bills or bond funds. These can offer stability when stocks go haywire.

3. Build a solid financial foundation

The April decline probably exposed some cracks in your financial foundation — maybe you didn’t have enough in savings or your investments were riskier than you realized.

Before you put any money back into the market, take a step back and make sure the rest of your financial house is in order. Check in and ask yourself if your savings rate is consistent and your debt is manageable.

If you don’t already have one, build up a healthy emergency fund. Experts recommend holding three to six months of living expenses in a high-yield savings account. That gives you breathing room during downturns and prevents you from selling investments at a loss when cash gets tight.

4. Understand and accept your risk tolerance

Now is a great time to reassess your real risk tolerance — not what you thought you could handle when everything was going up during a bull market.

“If you panicked and sold, you were likely invested too aggressively from the start,” says Feig.

One strategy for preventing panic selling in the future is to form some “buckets” for your money, says Arber.

Here’s the general idea.

• Short-term bucket: Money you’ll need within two years. Keep this in a high-yield savings account.
• Medium-term bucket: Money you might need in two to five years. A taxable brokerage account is a good fit.
• Long-term bucket: Money you won’t need for at least five years. Ideal for retirement accounts like a 401(k) or IRA.

“This way, next time you feel panic from a market downturn, limit yourself to making changes only in the medium-term bucket,” says Arber. “You can make a few moves that should help ease your concerns, but ultimately won’t ruin your long-term plans.”

Knowing your short-term needs are covered also makes it easier to leave long-term investments alone, even during a crash. Otherwise, if you’re putting cash into the market that you may need to pull out soon, you’re setting yourself up for more pain in the future.

5. Tune out the noise

Finally, take a hard look at how much the news cycle and social media influenced your decision to sell in April.

Markets reacted sharply to policy headlines and tweets. And while those developments can’t be ignored entirely, making investment decisions based on daily news often leads to whiplash and poor performance.

“Confirmation bias is evident in our social media feeds,” says Feig. “We’re inundated with information that confirms our existing beliefs, including apocalyptic financial market predictions.”

So, take a break from Reddit and turn off CNBC. The market will still be there when you get back. Instead, spend your time on financial content that reinforces a long-term mindset.

Bottom line

Panic selling in April may have cost you. But don’t compound the mistake by staying out of the market or trying to jump back in at the “perfect” time. Instead, rebuild with a plan that can withstand volatility. Automate what you can and focus on the long term.

If you’re feeling unsure about how to move forward, consider working with a financial advisor. A qualified advisor can help you avoid emotional mistakes, tailor a reentry plan that makes sense for you and help you build a strategy you can actually stick to long term.

Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.