After experiencing years of unprecedented growth, the S&P 500 index has remained relatively flat in recent weeks, gaining just 0.24% since the start of the year. Investor sentiment appears to be split, with a recent survey from the American Association of Individual Investors indicating that about 35% of respondents feel optimistic about the stock market outlook for the next six months. Conversely, pessimism has risen, affecting 37% of investors—an increase from 29% earlier this year.
In light of this mixed sentiment, many investors are questioning whether now is a safe time to invest in stocks or if it’s better to wait. Historical data suggests that maintaining a long-term investment strategy may be more beneficial than attempting to time the market. The stock market has consistently shown the potential for growth, even after significant downturns.
A notable example is an investment made in an S&P 500 index fund or ETF in December 2007, right before the onset of the Great Recession, which lasted until mid-2009. At that time, the S&P 500 was at a peak, and it wouldn’t reach another all-time high until 2013. Despite the interim challenges, that period of investment would have led to a staggering total return of more than 363% by today.
While it’s clear that one could potentially earn more by waiting for prices to drop—such as in 2009 when stock values were significantly lower—timing the market can be risky. Delaying investment can result in missed opportunities during recovery periods, emphasizing a consistent investment strategy.
Furthermore, while the overall market tends to recover from economic hardships, individual stocks can vary greatly in performance. Companies with strong foundations are more likely to endure bear markets and recessions, making them safer investments. Investors are encouraged to scrutinize their portfolios, ensuring that each stock retains its potential for growth. Selling weaker investments while prices remain high may be advantageous, and increasing investments in reliable stocks could offer substantial long-term gains.
For those considering entering the market, it’s noteworthy that the Motley Fool’s Stock Advisor team has identified what they believe to be the ten best stocks to invest in right now, with the S&P 500 index not making the list. Historical data reveals that recommendations from Stock Advisor have yielded significant returns, with the average return being 892% compared to the S&P 500’s 194%.
Investors are urged to engage with the latest recommendations to potentially maximize their investment outcomes and to seek a community that supports individual investors in navigating today’s market challenges.
