History Says Investors Who Make This 1 Move During Bear Markets Have Always Come Out Ahead

Buy-and-hold investors obviously don't like bear markets. Most people loathe them, in fact, and understandably so.

As the old adage goes, though, perspective is everything. What if, instead of being guided by their fears of a bear market, investors forced themselves to view a bear market as the long-term buying opportunity that it is?

As it turns out, the data supports the premise.

The data

Don't misunderstand. No investor is entirely immune to the frustration frequently fomented by prolonged stock sell-offs. We never know exactly how long they're going to last, or how deep they're going to cut, after all.

On the other hand, we've got a reasonable idea of how long they'll last, and how much damage they're likely to do. Brokerage firm Charles Schwab says the average one lasts about 14 months, and from peak to trough, reduces the S&P 500's (SNPINDEX: ^GSPC) value by about 34%. And most of them are closer to mirroring these long-term averages than you might think.

It's not this profile of the typical bear market that makes them somewhat easier to face, however. It's what consistently happens once they've run their course. See, once they're over, it only takes around two years to recover all the value that was lost during and because of that bear market.

That seems like a pretty long time, and in some regards, it is. For investors (even including retirees now living on their savings) with a 20-year-plus time frame though, it really isn't. That's especially true given the fact that Schwab also reports the average bull market lasts about five years and gains on the order of 165%.

Image source: Getty Images.

Illustrating the idea another way, numbers crunched by investment manager Capital Group indicate that over for any five-year span over the past century, the S&P 500 was down only 12% of the time. And for every 10-year time frame during this stretch, it was down only 6% of the time. And it still (obviously) always eventually recovered to reach another record high.

In other words, yes, you should be buying into long-term holdings in the midst of bear markets, even if it feels uncomfortable to do so. This, of course, means you'll always want to keep some cash ready to capitalize on such opportunities when they arise.

Better early than late

Just don't feel like you need to step in at what looks like the exact market bottom. You probably won't achieve such perfect timing, nor do you have to. Indeed, it's arguably better to be early than it is late, even if that means risking losing ground after your entry.

See, data gathered by mutual fund outfit Hartford Funds indicates that the S&P 500 has historically gained an average of 13.6% in just the first month of a new bull market, and an average of 25.3% during its first three months. Those are gains you don't want to miss out on.

Charles Schwab is an advertising partner of Motley Fool Money. James Brumley has no position in any of the stocks mentioned. The Motley Fool recommends Charles Schwab and recommends the following options: short September 2026 $95 calls on Charles Schwab. The Motley Fool has a disclosure policy.