Should I Pull All Of My Money Out of the Stock Market Now?

When the markets are dropping and your portfolio is falling with it, the instinct is to sell everything, cut your losses, and stick with cash. However, history shows that remaining invested is the best choice over the long run. Volatility is normal. Stocks undergo intra-year declines of about 16%, yet generate positive calendar-year returns around 80% of the time, demonstrating resilience.

Panic selling is rarely the smart move. So, before you consider pulling your money out, it pays to understand how a disciplined approach can help you achieve long-term gains.

Understanding Market Volatility

Significant volatility in the market refers to the stomach-churning ups and downs of stock prices that can cause even seasoned investors to question their strategies. These swings happen when new information hits the market—surprise earnings reports, economic news, or global events that make investors rethink what companies are worth. A low-volatility asset experiences minimal movement, while a high-volatility asset can see significant daily swings.

While the word “volatility” is heard most often when the market is swinging wildly, it’s a regular occurrence—like waves in the sea. Every significant downturn in U.S. history (thus far) has been followed by eventual recoveries. Those who keep their investments during these periods often achieve the best results in the long run.

The Risks of Pulling Your Money Out of the Market

Selling investments during a downturn locks in losses and eliminates the chance to benefit once the market recovers. Retail investors often do the exact opposite of the buy-low, sell-high maxim—selling after sharp declines and missing the market’s strongest rallies.

Moreover, timing the market requires getting it right twice: when selling and when you buy, a risky strategy even for seasoned professionals.

Historical Recovery Periods

Since 1929, the average length of a bear market in the U.S. has been around 11 months, so they typically last less than a year, even if the stress and drama of them lasts far longer. They occur about once every five years, so they are also not unusual—the last one was in 2022, with swings in April 2025 coming close.

Two Important Strategies To Prepare for Bear Markets

Diversifying across different asset classes, sectors, and geographies helps mitigate the effects of poor performance in any one stock or asset type. Bonds and alternative assets like commodities tend to behave differently from equities, which helps stabilize a portfolio when stocks drop. 

Dollar-cost averaging is another smart strategy that involves investing fixed amounts at regular intervals—putting a percentage of each paycheck in your 401(k) is an example of this—that helps avoid timing while also ensuring you are buying during periods of lower prices.

Your Age Should Help Inform What To Do

Young people can afford to stay invested in equities thanks to their longer time horizons, which allow them to ride out short-term swings. Essentially, the younger you are, the less you need to worry about a bear market.

Retiring during one, however, creates genuine risk because of sequence-of-returns problems—withdrawing from declining investments can permanently damage your portfolio’s long-term value. If you’re within five years of retirement, consider building a cash buffer covering one to two years of expenses and gradually shift toward more conservative allocations using a rule of thumb like the “100-minus-your-age” rule (e.g., 40% stocks/60% bonds at age 60).

When Selling May Be Necessary

While panic selling is typically unwise, there are real problems you might face that require you to pull out funds from your investments—a job loss, medical emergencies, or other financial hardships.

In these situations, consider selling only what’s absolutely necessary, starting with bonds, other stable assets, and stocks most unlikely to make gains in a rebound. You begin with these since they aren’t going to increase in value as much as, say, your shares in a tech stock.

The Bottom Line

Panic selling often exacerbates losses and derails financial goals. While volatility can be unnerving, it is a routine feature of markets. Stay invested and disciplined—and resist the temptation to pull out entirely.