The last year in stock markets and exchange traded funds (ETFs) have left many investors feeling battered, bruised and untrusting of the market’s recent rally. But you can only sit out so long.

Despite the recent rally, Gail Marks Jarvis for The Chicago Tribune says that money in stock funds stands about half the level that it did before the market crash.

The market is up around 40%, from March 9 lows, and individual investors have shown no urgency in getting back into the markets. So why are so many investors missing out on the rebound?

If you’re among the many who are worried and fearful of getting into the markets after taking a drubbing, there are some things you can do:

1. Recognize that buying is an emotional experience, too. The saying that “buying is easy and selling is hard” is often true, but after a market collapse that led many to lose as much as half of their portfolios, buying again can be a terrifying prospect.

2. Have a strategy. As we’ve said a thousand times (go ahead, count!), have a strategy for entering and exiting the markets. We rely on trend lines to determine those areas that might be worth entering into; waiting until a fund crosses its long-term trend line (the 200-day moving average), you will be taking a position in time to enjoy any potential long-term uptrend. On the downside, we have a stop loss that ensures we’re out instead of potentially riding a position straight to the bottom.

3. Whatever strategy you use, determine what it would take for you to sell. At what point would you want to let go? If and when that time comes, do it. But don’t make your decision on the fly – make it before you even buy, and don’t allow yourself to talk your way out of pulling the trigger.

4. If all signs say “yes” to buying a position you’ve been looking at, but your gut is still full of “what ifs,” do some research to support why you’d buy this position. Having the fundamentals to back it up may make you more comfortable when you take a position.

5. Talk about it. You and millions of other investors are in the same boat. Talk about your fears, voice what you’re thinking and support each other as you prepare to wade back in. You’re not alone in this.

6. Use ETFs. While there is risk, it’s spread out among dozens or even hundreds of holdings. You might feel better targeting one broad sector overall, rather than picking individual stocks.

Tags: ETF 101, Trend Following