After more than two years in a bull market, the stock market is still surging. The S&P 500 (SNPINDEX: ^GSPC) is up by more than 60% from its lowest point in October 2022, while the Nasdaq (NASDAQINDEX: ^IXIC) has soared by nearly 76% in that time.
Even the best bull markets can't last forever, though, and some investors are worried that a market slump and perhaps even a recession are around the corner.
It may be impossible to predict whether a recession is coming in the next year or not, but there's still good news about the future of the market.
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Predicting the market is incredibly difficult
While experts can make forecasts about where the market and economy may be headed, it's impossible to say for certain what will happen.
In an August 2024 report, J.P. Morgan analysts revealed that there's a 35% chance the U.S. will fall into a recession by the end of this year. The probability of a recession by the end of 2025 currently sits at 45%, according to the report. However, keep in mind that these predictions aren't always accurate.
Case in point: Back in June 2023, researchers at Deutsch Bank claimed that there was an almost 100% chance that the U.S. would face a recession later that year. Chief economist David Folkerts-Landau went so far as to say that "avoiding a hard landing would be historically unprecedented." Since that forecast, however, the S&P 500 has surged by more than 35%.
This isn't to say that a recession isn't on the way, because, again, the market will take a turn for the worse sooner or later. But it's next to impossible to know when that downturn will begin, and trying to predict the market's performance over the coming months could throw a wrench in your investing strategy.
Two key factors to surviving volatility
The market's unpredictable nature can be intimidating, but there's also good news: Your timing doesn't matter as much as you might think. No matter what the future has in store for the market, there are two simple strategies for keeping your money safe.
The first is dollar-cost averaging, which involves investing at regular intervals throughout the year. Sometimes you'll invest when prices are at their highest, but other times you'll snag stocks at deep discounts. Over many years, those ups and downs should average each other out, so you don't need to worry as much about investing at just the right moment.
It's equally important, though, to maintain a long-term outlook. In general, the longer you keep your money in the market, the better your chances of earning positive total returns. If you're investing in an S&P 500 index fund and were to sell after one year, there's a 27% chance you'd lose money, according to data from investment firm Capital Group. But by holding that investment for 10 years, there's only a 6% chance of losing money when you sell.
If you want to do everything possible to protect your portfolio, your best bet is to invest regularly -- no matter what the market is doing at the moment -- and then hold your investments for at least a decade or so.
The future is bright for the stock market
Even if the market crashes and we face a recession in 2025, all bear markets are only temporary. In general, they also tend to be much shorter than bull markets.
The average S&P 500 bear market since 1929 has lasted 286 days, according to data from investment group Bespoke. Meanwhile, the average bull market has lasted over 1,000 days. By staying invested for the long haul, you're likely to experience far more good days in the market than bad days.
That said, investing in the right places is key. Only strong stocks from healthy companies will thrive over time, and these stocks are also the most likely to survive periods of volatility. Right now is the perfect time to double-check that every stock you own deserves its place in your portfolio -- and maybe even add some new stocks to strengthen your portfolio even further.
There's no way to know for certain when the next recession or bear market will begin, making timing the market next to impossible. However, time in the market is far more important. By choosing quality stocks, investing regularly, and holding your investments for as long as possible, you're much more likely to survive whatever volatility may be on the horizon.
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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.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
