Everything in the market comes and goes. If stocks only went in one direction (up), there would never be any risk: investors would simply buy when they can, hold on for as long as they can and then cash out when the time comes. That’s not the stock market. That’s an annuity. You’re welcome to capture that proposition if the rollercoaster ride gets too intense or too harrowing.

But the problem with annuities is that they charge a lot in exchange for those nice nights of sound sleep and no waking up to recalculate your retirement plans. For one thing, the person selling them to you will charge you a fair amount of money because they’re absorbing all that volatility on your behalf. And for another, while locking in a return means locking out anything worse than what the contract specifies, you’re also locking out anything better. Retreating into a world without risk means sacrificing the chance to make your situation materially better.

And the worst time to lock out the positive side of volatility is right after you’ve experienced the negative. What you’re doing there is locking in the losses and giving up any opportunity to recover on any reasonable timeline. So there’s that observation: here in the real world, markets go down as well as go up. As long as the upswings make up for the downswings, we end up ahead. Throughout market history, the upswings left investors far ahead. The ride has justified the worries along the way.

The real question for investors is whether the progress between the downswings justifies the intervening pressure on your nerves. Only you can answer that one from your perspective. And you can’t answer it rationally without getting some numbers in front of you, so let’s go back and look at how stocks have performed in the last few bear markets.

Start with the most recent bear cycle, the one that made 2022 such an ordeal for so many. We started the year on a high note and by the time 2023 rolled around the S&P 500 was down 20%. It hurt. We’d lost a year, and about a fifth of the nation’s public capital. Someone who bought in on January 1 would have a right to feel frustrated. However, 2023 gave us all that back and more, leaving everyone ahead of where they started. Last year accelerated the process, to the point where that person who bought in at the start of 2022 was up a healthy 23% a little more than three months ago.

That’s a good return. It’s roughly what what the stock market has historically provided in the long haul . . . about 10 points a year. But of course the peak was a few months ago and now a lot of those post-2022 gains have evaporated for everyone. The S&P 500 is now down 13% YTD. If you count from the bottom of the 2022 bear market, we’re still up over 50%, which is not bad at all.

Every market cycle is different but these numbers, while anecdotal, should provide some confidence that things get better unless you walk away in the middle of a downswing. We just need to stay on the rollercoaster. And this applies across multiple cycles. Go back to the COVID crash and it hurt, at least at first. We were down 29% by March 22, which is when the situation got too hot for Powell and company to tolerate. By the end of that year we’d made up all our temporary losses and closed 2020 with a 16% full-year gain. After that, we never really looked back.

Recessions come every 6-7 years. Despite endless effort to predict and evade the next major contraction, none have been called since the 2020 lockdowns roughly five years ago. If one is on the horizon, it might be a few months ahead of average. On the other hand, as in the last few years, it might not come at all. Sometimes it takes a long time for a real recession. Between 2008 and 2020, a full decade and more went by without a severe slowdown.

For that matter, a decade went by after the 2008 crash without anything like a real bear market. That’s a long time by market standards. Usually we brace for one every 3-4 years. With the Nasdaq in the bear zone now, that particular clock resets. The suspense is over. That side of the market now needs to arrest its fall and recover lost ground. It could take months if Powell and company don’t see any need to intervene on the market’s behalf, or if they try and fail. But look longer out than those months and pulling the exit cord here seems like a sure way to cheat yourself out of a better future beyond this. Stocks move down. As we’ve seen, they also move up, higher and faster than many expect.

If you’ve been with us for the last three Nasdaq bear markets (2020, 2022 and now), the odds are good that you’ve almost doubled your money. And that’s going from the top of the first cycle to what could be closing in on the bottom of the current one. That’s the worst possible time to run the comparison, the least favorable of all. In our view, that number is pretty good. It’s been worth it.

Will the future be different from the past? We aren’t changing what we’re doing. So far the results have tracked our historical performance. As new stocks rise to the surface, we grab them. As old ones lose their luster, they drop out of our portfolios. Even as the world changes, our goal remains constant: find the stocks that can outperform, hang on until it’s clear that we need to change course.