PETE THE PLANNER: Don’t repeat mistakes you made after the stock market tumbled

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Peter DunnDear Pete,

I think I made a huge mistake. On the fourth Monday of March of this year, I panicked, sold my retirement investments and went to cash. I finally looked at the market just this past week, and realized I got left behind. My investments were getting destroyed and I wanted the bleeding to stop. I’m 50 years old and lost roughly 30% of my retirement money because of this. What do I do now?


We all have been under a tremendous amount of stress and pressure over these last three months. We’ve been scared, sad, mad and frustrated. I’m not surprised when I hear someone has snapped and reacted in a way they thought best to meet an unsettling moment. But I think we need to get something out of the way immediately, out of respect for the truth: You absolutely made a giant mistake.

Framing what happened as anything other than a mistake would be, well, another giant mistake. But if it makes you feel any better, Phil, you’re not alone. Every time the market “corrects,” countless, skittish investors get left behind. Before I answer your question, though, I need to bring everyone up to speed as to why you made a giant mistake.

“The market crash is different this time,” are the words at the heart of giant investment mistakes since the 1920s. And to be honest, I’ve spoken those words before, too.

But fortunately I’ve never acted on them. Looking for the anomaly almost always leads to flipping the cardinal rule of investing on its head. Instead of buying low and selling high, a person decides they’d rather try to sell low and buy high.

I was talking with an investment adviser friend of mine this past week, and he made a really interesting point. He noted market cycles happen much faster than they used to, and the jolting downs are much more quickly followed by rapid ups.

The fears of massive market events affecting retirement readiness, due to drawn-out comebacks, are less warranted than they used to be.

The last ugly(ish) market event, prior to this year, was late in 2018 when the S&P 500 dumped roughly 20%, and then rapidly recovered within about three months.

This time around, the market shed over 35% of its value very quickly and has more or less fully recovered within two months.

Phil, I’m suggesting a 50-year-old had no business reacting the way you reacted.

I know, that sounds incredibly harsh, judgmental and, arguably, tone-deaf. For that, I’m sorry. I obviously don’t know your retirement goals, but assuming you want to retire around 65, you would have had 15 years for the market to recover. That’s 90 times longer than it actually took to recover.

Now it’s time to work toward a solution.

Get a financial adviser the moment you read this column and listen to what she says.

She will be able to get you back into the market appropriately in accordance with your proper risk tolerance and time horizon, then keep you invested for the duration of your career.

The market will falter again. You know this. You knew this in February of this year, and you knew it in March.

There have been 26 market corrections (at least a 10% decline) since World War II, and the average recovery period has been four months. And if the market falls into bear market territory (20% decline or more), the average recovery time is 4.4 years. Per my investment adviser friend’s theory, this bear market recovery was a lightning fast two months.

You can’t change your mistake. That ship has sailed. But you can resolve to never do it again.

The best way to avoid making the same mistake twice is to write yourself a “the market hit the fan” letter.

What you’re about to read will seem like a joke; it’s not.

On the front of an envelope, write, “Open when the market is scaring you and convincing you to get out.” Then place a piece of paper in the envelope that reads, “Hey Phil, don’t sell. Buy more.” Seal the envelope and put it in your desk drawer.

It’s not that you didn’t know when to get out of the market. You didn’t know when to get back in.

That’s the real problem. The only way to prevent the real problem is to avoid selling.•


Dunn is CEO of Your Money Line powered by Pete the Planner, an employee-benefit organization focused on solving employees’ financial challenges. Email your financial questions to

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