Can We Time the Market? What Decades of S&P 500 Data Reveal About the Bear Market Debate

Investor Sentiment Remains Split as S&P 500 Approaches Key Milestones

As 2025 progresses, the S&P 500 has demonstrated remarkable strength, advancing over 37% from its April lows. Yet beneath the surface, market participants remain deeply divided about whether a bear market is coming. Recent surveys reveal a split mentality: approximately 38% of investors maintain a bullish outlook for the next six months, while just over 36% adopt a bearish stance. This tension reflects a fundamental question that haunts investors at every market peak: Is it already too late to buy?

The Paradox of Record Highs: Why the Best Time Often Appears to Be the Worst

The fear of investing at market peaks is understandable. Purchasing an S&P 500 index fund immediately before a severe downturn seems irrational. Yet historical analysis tells a strikingly different story.

Consider the Great Recession as a case study. An investor who committed capital to the S&P 500 in late 2007—precisely when the index had just reached new all-time highs following the dot-com recovery—faced immediate devastation. In the near term, this decision appeared catastrophic. But within a decade, that same investment had generated total returns exceeding 78%. Fast forward to today, and those returns have surged to 362%.

The lesson challenges conventional wisdom: investors who buy during market euphoria, even when followed by severe downturns, ultimately outperform by substantial margins.

The Waiting Game: Why Delaying Entry Costs More Than Bad Timing

If purchasing at peaks seems risky, surely waiting for a market bottom offers superior returns? The data suggests otherwise.

Many investors fall into a critical trap: holding cash indefinitely in hopes of catching the perfect entry point. Consider an alternative scenario where an investor waited until 2014 to enter the market—a seemingly more prudent decision, as the S&P 500 had only recently established new highs and officially entered bull market territory. Despite this “safer” timing, that investor’s returns by today amount to only 270%—a significant underperformance compared to those who invested seven years earlier at apparent market peaks.

This reveals the dominance of time in the market over timing of the market. Waiting too long extracts a steeper penalty than buying at seemingly unfavorable moments.

Predicting Downturns: A Track Record of Failure

The uncertainty surrounding whether a bear market is coming has cost investors dearly throughout recent history. In June 2022, Deutsche Bank analysts assigned a “near 100%” probability to a recession occurring within the following 12 months. That recession never materialized. Instead, the S&P 500 advanced over 80% from that forecast date.

Attempting to predict market direction has proven expensive repeatedly. Investors who panic-sold based on recession forecasts forfeited substantial gains. Those who delayed purchases waiting for predicted declines missed years of compounding.

A Practical Framework: Consistency Over Clairvoyance

Given the futility of market prediction, a more sustainable approach emerges: systematic, consistent investing regardless of short-term sentiment. The stock market will perpetually experience volatility and uncertainty. Distinguishing between temporary corrections and structural bear markets remains impossible in real time.

Rather than attempting to solve the unsolvable timing puzzle, investors benefit from treating market downturns as opportunities to continue dollar-cost averaging. If you buy at a market peak, subsequent declines actually reduce your average purchase price. Patience transforms apparent mistakes into long-term advantages.

The Historical Verdict: Time Conquers Uncertainty

The S&P 500’s long-term trajectory overwhelmingly supports continuous participation over selective timing. Even those who invested before the Great Recession—perhaps the worst conceivable moment in modern market history—generated extraordinary wealth by maintaining their positions. The future remains uncertain, but uncertainty itself should not drive inaction. The empirical record suggests that the true risk lies not in buying at market peaks, but in waiting indefinitely for conditions that may never arrive.