History Says This 1 Investing Mistake Could Cost You More Than Any Stock Market Crash

The S&P 500 (SNPINDEX: ^GSPC), Nasdaq Composite (NASDAQINDEX: ^IXIC), and Dow Jones Industrial Average (DJINDICES: ^DJI) are all nearing record highs yet again, which, in some regards, puts investors in a challenging situation.

Is it really smart to invest when the market is this expensive? Or would it be safer to wait until prices fall to "buy the dip"? Are we in a bubble that's on the verge of popping? Or is the market poised for many more months or even years of growth?

Nobody can say exactly where the market is headed right now. If history proves anything, though, it's that staying invested is the most lucrative move investors can make -- and avoiding the market could be costlier than you might think.

Image source: Getty Images.

Time is more important than timing

Since 1929, the S&P 500 has declined by around 27% during the average bear market. If the bear market was accompanied by a recession, that figure jumps to 35%. During the Great Recession -- which was the most severe economic downturn post-WWII -- the S&P 500 lost around 56% of its value.

Now, let's compare that to how much investors could have potentially missed out on by choosing to avoid the stock market during periods of uncertainty.

In June 2023, for example, experts at Deutsche Bank predicted a "near 100%" chance that a recession was coming soon. Since that forecast, though, the S&P 500 has surged by a staggering 76%.

^SPX data by YCharts

Or, let's say that you stopped investing last year as concerns around tariffs, inflation, unemployment, and an AI bubble began to ripple through the market. Since the S&P 500 bottomed out in April 2025, the index has earned total returns of nearly 53%.

^SPX data by YCharts

The market's short-term performance will always be unpredictable to a degree, and even the experts don't always get it right. Investors who press pause on buying out of fear often risk missing out on more than they would have lost during the downturn itself.

The best move investors can make right now

It's important to note that even if we do face a recession, bear market, or crash, those losses are only temporary -- as long as you avoid selling.

The key is to ensure you're investing in strong stocks with long-term growth potential. No investment is immune to volatility, but over time, healthy companies have the best chance of weathering even the worst market downturns.

Warren Buffett perhaps said it best in a 2008 New York Times article. "You might think it would have been impossible for an investor to lose money during a century marked by such an extraordinary gain," he said, discussing the Dow's meteoric rise amid brutal volatility.

"But some investors did. The hapless ones bought stocks only when they felt comfort in doing so and then proceeded to sell when the headlines made them queasy."

Katie Brockman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.