Getting back into the market after you have moved all or most of your portfolio to cash requires both a plan and patience. Being impatient can put your portfolio at risk.
After you have moved out of the markets typically you will have to deal with two worries:
• Am I getting in back in too early or too late?
• Should I invest all my cash immediately or space it out?
The answer to the first situation is to trust the method of investing you have been using. If you are using an investment software program to analyze and provide buy/sell signals and it has been successful for you in the past, then wait for new buy signals. Of course you will continue to watch the news to see what the Wall Street gurus and politicians are doing because they have an immense influence on the market’s direction.
How much to invest should also be based on buy signals. If you sold six positions most likely you will be buying back in with six new symbols. But unless your program or methodology gives you six unique buy signals on the same day you will most likely just buy as the signals come, and this could take weeks or even months before you are again fully invested. Will you miss opportunities by waiting for your signals, perhaps, but by sticking with your methods you will also reduce risk and be more likely to garner future gains. Because different groups, like asset, sector or foreign groups of ticker symbols react different to market forces it is most likely that new buy signals will be spread out over time; but this is a good things as it helps keep you diversified and reduces risk.
In other words, if your investment methods have been making you money, previously told you to exit completely or partially from the markets, then the safest course is to continue your analysis at the same frequency (weekly for example) and move back in as your methodology suggests. Changing methods of analysis at this point can put you in the position of using unproven methods or results to make your investment decisions. Of course if you are using a software program that allows for back testing then it may be safe to switch techniques at this point.
Personally I find that it takes me a few months to get back to being fully invested. Yes, it is frustrating at times, but I just keep reminding myself it is safer to jump with a positive signal than to just jump not knowing what the outcome will be.