If a Bear Market Is Coming, This Is the Single Best Investing Decision You Can Make

In 2026, it can feel like each time the market takes one step forward, it snaps back just as quickly, unable to find the footing needed for a prolonged rally. The worry then becomes that if stocks can't rebound from a broad sell-off, a bear market may loom, which would be the S&P 500 (SNPINDEX: ^GSPC) falling by 20% or more from its recent highs.

If that's the case and we enter a bear market, history suggests there's one move to make that could be the single best investing decision.

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First, what not to do

When stocks are sliding off a cliff, it can feel like making some kind of move is better than doing nothing. That can cause many investors to panic-sell, which history suggests is ultimately one of the worst decisions an investor can make.

For example, according to Hartford Funds, from 1996 to 2025, surprisingly, 48% of the best days for the S&P 500 occurred during bear markets. That's a significantly higher percentage than 28% of the best days for the S&P 500 occurring during the first two months of a bull market, and 24% of the best days occurring during the rest of the bull market.

Looking at some figures also shows that panicking and selling can cost more than most people think. As a hypothetical, if someone had invested $10,000 in the S&P 500 in 1996 and left it untouched, by 2025 it would be worth $192,167. Missing the 10 best days, however, reduces that total return by 56% to $85,490. Missing the 20 best days drops that return down to $49,551, and missing the 30 best days would leave someone with $31,123.

What to do in preparation for a bear market

Corrections and bear markets come with the territory for investors. The good news is that they tend to not last long, and the gains of a bull market easily exceed the losses of a bear market. According to Hartford Funds, the average duration of a bear market is less than 10 months, while the average length of a bull market is 2.7 years. On average, stocks also lose 35% of their value during a bear market, while the average gain for stocks is 112% during a bull market.

That means one of the best moves an investor can make is to already have a portfolio in place that lets them sleep well at night. During a sell-off, someone may start dumping shares of riskier stocks or multiple stocks in a single sector that they were too heavily concentrated in. Having a diversified portfolio already established before a bear market, however, may offer greater protection against the urge to panic-sell.

One investing area to consider for diversification includes consumer goods, as shoppers will always need to buy necessities. Another is Dividend Kings, as those companies have increased their dividend payouts for 50 or more consecutive years. That shows the strength of those companies' business models and the reliability they can offer, even in a down market.

Jack Delaney 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.