Fidelity Research Warns Against Market Timing During Bear Markets

Fidelity Investments research indicates that selling assets or pausing investments during bear markets is a costly mistake for long-term investors. Data covering a 36-year period from 1988 to 2024 shows that missing only the five best performing days of the S&P 500 could reduce a portfolio's growth by 37 percent, potentially turning a $522,576 investment into $330,000.

Bear markets, defined as price declines of 20 percent or more, occur on average every six years in the U.S. market. While these periods cause volatility, analysts suggest they provide opportunities to buy stocks at a discount.

To maintain long-term growth and avoid the risks of market timing, financial experts recommend utilizing dollar-cost averaging and low-cost index funds, such as the Vanguard S&P 500 ETF.