Westend61 | Getty ImagesLoading chart...Panic selling can 'crater your portfolio'Some investors are prone to panic selling during periods of volatility and then often miss the stock market recovery with cash sitting on the sidelines, research shows.
"The roller-coaster ride back up happens just as quickly," and missing recovery days "can crater your portfolio," said Baker, who is also a member of CNBC's Financial Advisor Council.
To that point, missing the 20 best days in the stock market from Jan. 1, 2003, to Dec. 30, 2022, would have cut your total portfolio returns by more than half, according to J.P. Morgan.
Ultimately, staying invested pays off long-term because "it's a loser's game" to try to time the market, Baker said.
Your existing cash reserves, for example, can cover emergencies or provide funds to "take advantage of opportunities," he said.
Persons:
Baker, Morgan, Douglas Boneparth
Organizations:
CNBC's, Bone
Locations:
New York