If you're feeling nervous about the stock market right now, you're not alone.
According to a survey from Allianz Life, more than three-quarters of Americans expect the market will be "very volatile" throughout 2023. Furthermore, around 62% of survey participants are bracing for a recession this year.
There's good and bad news about the market and economy. The bad news is that a recession is looking more likely, with experts at JPMorgan Chase projecting a higher than 50% chance it will happen sometime in 2023.
But the good news is that a bull market is coming -- perhaps sooner than you expect.
The future is bright for the stock market
In times like these, it can be tough to stay optimistic about stocks. But no downturn can last forever, so it's only a matter of time before the market rebounds. While nobody knows precisely when that will happen, the next bull market will begin sooner than you might think.
The stock market is often described as being forward-looking, meaning that during periods of economic uncertainty, the market will generally take a hit before the economy.
For example, back in January 2022, the S&P 500 began its decline as investors worried that the Federal Reserve would increase interest rates and spur a recession. But the Fed didn't even begin hiking rates until March, and the economy still has not yet officially entered a recession.
The same also works in reverse, though, which is great news for investors. In most cases, the market is already on the rebound before the economy even reaches its bottom. In fact, over the past 50 years, only one recession failed to follow this trend (the dot-com bubble burst in the early 2000s).
When will the next bull market begin?
The inner workings of the stock market and economy can be incredibly complex and confusing. But all you need to know is that if you're waiting for the economy to recover before you begin investing, you may miss out on the early stages of the next bull market.
For instance, during the Great Recession, the S&P 500 officially reached its lowest point in March 2009. But the recession didn't technically end until June of that year, and during those few months, the S&P 500 surged by nearly 40%.
If you had waited to invest until the economy was on the rebound, you'd have missed out on those earnings. And hindsight is 20/20. In the moment, it's impossible to know whether we're in the early stages of a bull market or just a temporary rebound before prices fall again. By waiting until stock prices are clearly on the rise, you'll forgo valuable time to grow your investments.
Keeping your money safe during a recession
It's not easy to invest during times like these, but buying during the market's low points and simply riding out the storm is one of the best ways to build long-term wealth.
Investing in the right places is key to keeping your money safe. Weaker companies will have a harder time surviving a recession, and those stocks are risky. But healthy businesses with solid fundamentals (like strong financials and competitive advantage, for instance) are far more likely to rebound after a downturn.
When your portfolio is filled with these types of stocks, you're more protected against a recession. While your investments may still take a hit in the short term, there's a much better chance they'll make a full recovery.
Nobody knows where the market is headed over the coming months, but it's only a matter of time before it's on the road to recovery. By continuing to invest during the slumps, you'll be in a fantastic position to take advantage of the next bull market.
