Pure Benchmarks · Guide
Should I Sell My Stocks Before the Next Market Crash?
Short answer
Selling before a crash only helps if you get two calls right: when to get out and when to get back in. Crashes are rarely announced in advance, and the sharpest rebound days tend to arrive close to the worst ones. Hartford Funds found that 76% of the market’s best single days happened during a bear market or the first two months of a recovery, which is when someone who sold out of fear is most likely to be in cash. A crash forecast on its own is a weak reason to sell, but the decision can be measured: compare what you did with what holding the same portfolio would have produced.
When markets have run up for a while, warnings about the next crash get louder, and selling first can feel like the careful thing to do. This page does not tell you whether to sell. It explains why getting out before a crash is harder than it looks, what the research says about the days you miss while waiting to get back in, and how to see what holding would have done for your own portfolio.
Link your portfolio and see, in dollars, what your own holdings would have done if you had held through past crashes instead of selling. Every sale and re-entry after that is scored against staying invested.
See Your Free Benchmark ReportA crash call is really two calls
To come out ahead you have to sell before most of the fall and buy back before most of the recovery. Being right about the first and late on the second can leave you worse off than if you had done nothing, because you sold at one price and bought back higher.
The best days sit next to the worst days
Large up days cluster around large down days. JP Morgan Asset Management found that missing just 10 of the best trading days over 20 years cut a $10,000 investment from $71,750 to $32,871. Hartford Funds found that 76% of the best single days fell in a bear market or the first two months of a recovery, so an investor waiting in cash for the dust to settle tends to miss them.
Why most investors trail their own funds
DALBAR’s research on investor behaviour has repeatedly found that average investors earn less than the funds they own, with 2024 showing a gap of 848 basis points. The gap comes largely from buying and selling at the wrong moments, which is exactly the risk a crash-driven sale creates.
What to check before you act
Ask whether anything has changed in your own situation, such as your time horizon, income or need for cash in the next few years. If it has, adjusting the mix may make sense whatever the market does. If the only change is a feeling that a crash is coming, write down the rule you would use to get back in before you sell. Without one, the second call is left to emotion.
See what holding would have done for you
Pure Benchmarks, our own product, runs your current holdings through past crashes and shows what selling at the bottom and waiting to return would have cost against holding. Once your portfolio is linked, its Decision Benchmark also scores every later sale and re-entry against the portfolio you would have had if you had stayed put.
Link your portfolio and see, in dollars, what your own holdings would have done if you had held through past crashes instead of selling. Every sale and re-entry after that is scored against staying invested.
See Your Free Benchmark ReportFrequently asked questions
Should I sell my stocks before a crash?
Selling first requires timing both the exit and the return, and the strongest rebound days often arrive close to the worst days. A crash forecast alone is a weak reason to move to cash. This page is information for comparison and not a recommendation about any holding.
Can anyone predict the next stock market crash?
Some people call crashes correctly, but rarely with the timing needed to profit from both selling and buying back. Warnings can also run for years before a decline arrives.
What happens if I sell and the market keeps going up?
You face a second decision about when to buy back, usually at higher prices. That is the most common way a protective sale turns into a loss.
Is it safer to hold cash until the crash happens?
Cash avoids the decline but earns nothing from the recovery. JP Morgan Asset Management found that missing 10 of the best days over 20 years more than halved the ending value of a $10,000 investment.
How can I see what holding through a crash would have done for my portfolio?
Pure Benchmarks, our own product, runs your current holdings through past crashes and compares selling with holding in dollars, using your connected portfolio.
Keep exploring
- What If You Had Not Sold During the Market Crash?
- What Happens If I Sell and Miss the Market Recovery?
- Should I Move My Portfolio to Cash Before Things Get Worse?
- The Cost of Panic Selling Calculator Built on Real Peer Data
- The Stock Market Is Scary Right Now. How Do I Know If I Should Sell?
- I Sold and Missed the Rally. When Should I Get Back In?
- The Market Is at an All-Time High. Is It a Bad Time to Invest?
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This page is an information baseline for comparison only. It is not investment advice and not a recommendation to buy, sell, replace, or transfer any specific asset, account, or firm. Past performance does not guarantee future results. All figures shown are illustrative.