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Waiting for 'safe' may be costly
If an investor isn’t already invested in the market today, here’s guidance from Fidelity Investments that outlines the potential risks of staying out:  

• There have been 14 bull markets (defined as an increase of 20% or more in stock prices) since 1930. They have varied in size and scope, lasting from just over a year to nearly 10 years, with returns ranging from 38% to more than 400%.  

• Bull markets tend to have one thing in common: front-loaded performance. For example, the first month of a new bull market on average has provided an investor with more than 12% of an entire bull market’s gains, with an average return of 14% during these initial months.  

• Within six months, more than one quarter (27%) of an entire bull market’s performance (on average) was already in the books.  

• The first 12 months of the average bull market has provided more than 40% of an entire bull market’s price appreciation, yielding on average 45% for investors — well above the category’s longterm average annual return of 10%.  

• By definition, new bull markets are not known until the stock market has already increased 20%. Investors who are prone to move entirely out of stocks during bear market declines (a drop of more than 20%) might want to re-consider such action, as attempting to properly time the beginning of a new bull market can be challenging.  

• Further, those who choose to re-enter after a few months of positive performance— when the climate feels “safe” — may miss a sizable portion of a bull market’s overall gain.  

• Investors who flee to cash during bear markets should keep in mind the potential cost of missing the early stages of a stock market recovery, which historically provides the largest percentage of returns per time invested.
 

(Note: Stock market performance measured by the S&P 500 Index. Indices are unmanaged measures of market conditions not available for direct investment. Past performance does not guarantee future results.)  

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