If a Stock Market Crash Is Coming, History Says the Smartest Investors Are All Making the Same Move

This year has been a challenging one for Wall Street, but that hasn't seemed to slow the market down.

Despite oil price shocks, surging bond yields, and AI safety concerns, the S&P 500 (SNPINDEX: ^GSPC) has surged by more than 21% over the past six months. The tech-focused Nasdaq Composite (NASDAQINDEX: ^IXIC) has fared even better, up by nearly 30%.

However, the question is not whether a bear market is coming, but when. Stock prices can't keep climbing forever, and at some point, the market is bound to take a turn for the worse. Preparing for that downturn, though, is simpler than you might think.

Image source: Getty Images.

Time in the market beats timing the market

Right now is perhaps the most nerve-wracking part of the market's cycle. Stocks are still at record highs, but with so many headwinds challenging the market, it feels like we're waiting for the other shoe to drop.

Nearly 50% of investors believe stock prices will fall in the next six months, according to the latest weekly survey from the American Association of Individual Investors. If you're one of them, it can be tempting to get out of the market now while prices are still high. However, history says it's actually more lucrative to stay the course.

The market often behaves unpredictably in the near term, and it sometimes continues to surge against all odds. In 2023, for instance, strategists at Deutsche Bank warned there was a "near 100%" chance that a recession would begin in the next year, emphasizing that a soft landing would be "historically unprecedented."

^SPX data by YCharts

Three years later, and not only has that recession not materialized yet, but the S&P 500 has surged by nearly 82%. The investors who capitalized on these returns were those who continued buying even when the future looked bleak.

To be clear, this doesn't mean that the next three years will look similar to the last three. But despite all the warning signals, the market could still have plenty of steam left before the next downturn arrives.

History says the best move right now is also the simplest

The smartest move investors can make right now is to buy quality stocks and prepare to hold them for at least a few years. The longer you can hold your investments, the less likely you are to lose money -- even if the market crashes right after you buy.

Say, for example, you invested in the S&P 500 in late 2007. The market was on the verge of the Great Recession, and throughout the next two years, the S&P 500 would lose more than 50% of its value. Yet over the next decade, the index surged by more than 100%.

^SPX data by YCharts

This trend holds up throughout history, too. Between 1919 and 2025, every single one of the S&P 500's rolling 20-year periods has ended in positive total returns, according to analysis from Crestmont Research. No matter how severe the short-term volatility, the market has always managed to thrive over time.

Now, could you have earned more by only investing during the market's low points? Of course. But it's impossible to identify the market's bottom in the moment, and if you wait too long, you risk missing out on the valuable recovery period.

While it's certain that another downturn will eventually arrive, no one can say exactly when. Rather than waiting for just the right moment to buy or sell, history suggests staying in the market is the more lucrative option.

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.