A plain answer to a common question, with ten years of market data: what pulling out cost in past crashes, when reducing risk made sense, what a sale triggers, and the middle paths between all in and all out. With a market risk check that updates every trading day.
For most long‑term investors, pulling everything out of the stock market has historically cost more than it saved, because every S&P 500 fall of 10% or more since mid‑2016 regained its high and the best days came in the same weeks as the worst; the cases where reducing risk made sense were money needed within a few years, leverage or one oversized position, more loss than the investor could sit through, and a rule set in advance.
Pulling out is two decisions, not one. The sale is usually made in fear. The buy‑back has to be made while the news is still bad, which is when past rebounds started. Investors who get the first call right often get the second one wrong.
This is not a forecast and not personal advice. Whether to hold less in stocks depends on when you need the money and how much of a loss you can live with. The full set of options is in the portfolio protection guide. If the worry is the S&P 500 itself being top‑heavy, that is a different question: S&P 500 concentration.
Data through the close of Oct 20, 2026. The S&P 500 fell 1.2% over the last five trading days, and the Nasdaq‑100 fell 3.5%. The S&P 500 is 1.3% below its record close of Oct 6: a small dip from its record. It is 6.4% above its 200‑day average (+7.9% a week earlier). Its 20‑day volatility is 9.4% a year, calmer than 71% of trading days since 2016.
Last updated Oct 20, 2026. Members only.
| Exent regime pillar | Today |
|---|---|
| Liquidity | |
| Credit stress | |
| Economic cycle | |
| Sentiment | |
| Regime: Risk ON · Neutral · Risk OFF |
Price trend and volatility show what the market has already done. Exent’s macro regime score reads the backdrop behind it (liquidity, credit stress, the economic cycle and sentiment) and classifies it as Risk ON, Neutral or Risk OFF. Market intel members see today’s reading and get an alert when it changes.
Most locked in the fall and missed the rebound. Between mid‑2016 and September 2026 the S&P 500 had 5 declines of 10% or more, and every one was back at its high. The rise from the low back to the old high was always larger than the fall, because of loss recovery math. In Exent’s data (price closes):
| Decline, peak → low | Fall | Rise from the low back to the high | Back at the high | Trading days, peak to recovery |
|---|---|---|---|---|
| Jan 26, 2018 → Apr 2, 2018 | −10.2% | +11.4% | Aug 24, 2018 | 146 |
| Sep 20, 2018 → Dec 24, 2018 | −20.2% | +25.3% | Apr 29, 2019 | 150 |
| Feb 19, 2020 → Mar 23, 2020 | −34.1% | +51.7% | Aug 18, 2020 | 126 |
| Jan 3, 2022 → Oct 12, 2022 | −25.4% | +34.0% | Jan 19, 2024 | 513 |
| Feb 19, 2025 → Apr 8, 2025 | −19.0% | +23.5% | Jun 27, 2025 | 89 |
An investor who sold at the low on Mar 23, 2020 and waited for the index to regain its old high missed a 51.7% rise, completed by Aug 18, 2020. The 2025 tariff selloff was the fastest round trip in this list, at 89 trading days. The 2022 bear market was the slowest: 513 trading days, about two years, from the peak to a new high. Past recoveries are not a promise about the next one; older crashes took longer (how long markets take to recover).
Mostly the best days, which tend to arrive in the same weeks as the worst. In the same period, 8 of the S&P 500’s 10 best days came within 10 trading days of one of its 10 worst. Over a longer span, Hartford Funds found (2025) that about 42% of the S&P 500’s strongest days in the prior 20 years came during bear markets, and another 36% in the first two months of a new bull market. Illustrative, from the same data:
| Illustrative: $500,000 in the S&P 500 fund (SPY), Jul 2016 – Sep 2026 | Return a year | Ending value |
|---|---|---|
| Stayed invested every day | 15.2% | $2,131,500 |
| Missed the 10 best days | 8.2% | about $1,122,000 |
| Missed the 20 best days | 4.9% | about $816,000 |
| Held T‑bills (BIL) the whole time | 2.1% | $617,500 |
Missing the 10 worst days as well would have left the return at 15.5% a year, close to staying put. That needs both sets of days picked in advance, and here they came within days of each other. Why most attempts fail is covered in does market timing work.
When the reason was the investor’s own situation rather than a forecast. The reasons that have held up:
| Reason | Why it has held up | How investors often act on it |
|---|---|---|
| Money needed within a few years | The 2022 bear market took until Jan 19, 2024 to regain its high | Move that amount, not the whole portfolio, to cash or short‑term Treasuries |
| Leverage | A 3× Nasdaq‑100 fund fell 80.9% in 2022; a 2× S&P 500 fund 59.3% in 2020 | Cut leverage first, before core holdings |
| One stock or theme far above its target weight | A single position can fall further than the index | Trim in stages to a set limit |
| More loss than you can sit through | Illustrative: the 2020 fall of 34.1% on $800,000 is about $272,800 | Lower the stock share to a level you would hold through a fall |
| A rule set in advance has triggered | It was decided calmly, with the way back in written down | Follow the rule, often in steps |
Reasons with a weaker record: a headline, a crash call, the market sitting at a record, or a loss that has already happened. More on each case: sequence of returns risk for withdrawals, leveraged ETFs in a crash and drawdown tolerance.
Sources: IRS Topic 409, IRS Topic 558, and the wash sale rule. A worked tax example is in should I sell my stocks before a crash, and the re‑entry question in when to get back into the market.
In 401(k) plans most savers stay put: Vanguard reported that only 5% of its participants traded in 2025. Those who moved did it in a rush. In the April 2025 selloff, 401(k) trading ran at almost 10 times a normal day as money left large US stock funds and target‑date funds for stable value, bond and money market funds, according to Alight data reported by Yahoo Finance. The S&P 500 was back at its high on Jun 27, 2025. More in how to protect a 401(k) from a crash.
Size the risk instead of switching it off. Common approaches, not personal advice:
| Option | What it does | What it gives up |
|---|---|---|
| Rebalance to your target mix | Sells some of what rose and buys what fell, so risk stays where you set it | Tax on gains in a taxable account; none inside an IRA or 401(k) |
| Trim concentration and leverage | Cuts the holdings that fall furthest first | Upside if that position keeps winning; tax on gains |
| Hold a cash buffer | Covers near‑term spending, so stocks never have to be sold in a fall | Cash earned 2.1% a year vs 15.2% for the S&P 500 |
| Move to a lower‑risk mix | 60% S&P 500 / 40% T‑bills: worst fall −20.8% vs −33.7% | Return: 10.1% a year vs 15.2% |
| Stage the change | Sell, or buy back, in steps, for example thirds over three months | Slower; part of the move may come at worse prices |
| Pull everything out | No stock losses while out | Needs a re‑entry decision; the growth gap shown above |
Lower‑risk mixes, rebalanced monthly, Jul 2016 – Sep 2026 (hypothetical, before trading costs and taxes; “bonds” is the US bond fund AGG):
| Portfolio | Return a year | Volatility | Worst fall | 2022 bear | COVID 2020 |
|---|---|---|---|---|---|
| 100% S&P 500 | 15.2% | 17.8% | −33.7% | −24.5% | −33.7% |
| 80% S&P 500 / 20% bonds | 12.4% | 14.3% | −27.7% | −22.4% | −27.7% |
| 60% S&P 500 / 40% T‑bills | 10.1% | 10.5% | −20.8% | −15.0% | −20.8% |
| 50% S&P 500 / 50% T‑bills | 8.8% | 8.7% | −17.4% | −12.5% | −17.4% |
Each step down in stocks cut the worst fall and the yearly return together. How to do each one: how to rebalance, how to reduce risk without selling and, for the all‑cash option, should I go to cash before a crash.
This page cannot advise on your situation. Historically, pulling everything out cost long-term investors more than it saved: every S&P 500 fall of 10% or more since mid-2016 regained its high within 89 to 513 trading days. Reducing risk made more sense when money was needed soon or the portfolio held more risk than the investor could sit through.
Tops are rarely clear until later, and a forecast alone has been a weak reason to sell. Stronger reasons are a near-term need for the money, leverage or one oversized position, a portfolio that has drifted above its target risk, or a rule set in advance.
Switching funds inside a 401(k) is not taxed. Withdrawing from a traditional 401(k) is taxed as income, and before age 59½ generally adds a 10% additional tax. Only 5% of Vanguard plan participants traded in 2025, and those who fled stocks in the April 2025 selloff saw the S&P 500 back at its high by Jun 27, 2025.
It has happened, and the loss on paper can be large. The S&P 500 fell 34.1% from Feb 19, 2020 to Mar 23, 2020 and was back at its high by Aug 18, 2020; the 2022 fall took until Jan 19, 2024 to recover. Investing in stages and keeping near-term money out of stocks limit what a badly timed start can cost.
Going all to cash protects against a fall but needs a second decision to get back in. Missing the 10 best days between mid-2016 and September 2026 cut the S&P 500’s return from 15.2% to 8.2% a year, and T-bills returned 2.1% a year over the same period.
Between mid-2016 and September 2026, S&P 500 falls of 10% or more took 89 to 513 trading days to get from the old high back to it. The 2025 tariff selloff was the fastest and the 2022 bear market the slowest, at about two years.
Market Intelligence reads the market regime and tells you whether the backdrop favors taking risk or protecting capital.
Educational content, not investment advice. Examples are illustrative; past performance does not guarantee future results.