Whether you're a brand-new investor or someone who's been putting their money to work on Wall Street for decades, there's always an opportunity to learn something new. Whether it's observing how the market reacts to shifts in fiscal or monetary policy, or witnessing how investors' emotions influence next-big-thing trends on Wall Street, the journey for investors, once begun, never stops.

While there are very few guarantees when it comes to the stock market, there are a small handful of irrefutable truths investors of all walks can count on.

A small bull figurine placed atop a financial newspaper and in front of various volatile stock charts.

Image source: Getty Images.

1. Stock market crashes, corrections, and bear markets are perfectly normal

The first irrefutable fact when putting your money to work on Wall Street is that it does, indeed, go down from time to time. Double-digit percentage corrections, bear market declines of 20% or more, and jaw-dropping stock market crashes, are all a normal part of the long-term investing cycle.

According to data compiled by sell-side consultancy company Yardeni Research, the broad-based S&P 500 (^GSPC 1.02%) has undergone 39 separate double-digit percentage declines since the start of 1950.  This works out to a correction every 1.89 years.

Although downturns may come as an unwelcome surprise to many, they're a perfectly normal and absolutely inevitable part of putting your money to work on Wall Street.

2. It's impossible to predict, with 100% accuracy, short-term directional moves in the stock market

Although it's an irrefutable truth that downturns will, eventually, occur in the iconic Dow Jones Industrial Average (^DJI 0.40%), growth-driven Nasdaq Composite (^IXIC 2.02%), and the aforementioned benchmark S&P 500, don't think for a moment you'll be able to predict when directional moves in the major indexes will occur with any accuracy.

This year, I've looked at dozens of economic datapoints and predictive indicators that offer strong historic correlations with directional movements in the major indexes. For instance, a decline of at least 2% in U.S. M2 money supply has previously been associated with deflationary downturns in the U.S. economy, as well as significant bear markets for stocks.

But while an assortment of datapoints and forecasting tools can be right a lot of the time, or perhaps even 100% of the time under certain circumstances, there isn't a tool that can guarantee the short-term directional movements of the Dow, S&P 500, or Nasdaq Composite.

In other words, there is no blueprint for timing the market.

3. Optimism abundantly outweighs pessimism

Another irrefutable Wall Street truth is that optimism trumps pessimism. Even though downturns in the broader market are a given, being an optimist puts the Wall Street "numbers game" decisively in your favor.

For example, there have been 12 recessions in the U.S. following World War II. Nine of these 12 recessions lasted less than a year, while the remaining three failed to surpass 18 months. By comparison, almost every economic expansion following a U.S. recession has been measured in multiple years. A growing economy drives corporate earnings higher, which is what allows for stock valuations to expand.

It's a similar story when comparing bull and bear markets on Wall Street. A comprehensive analysis from Bespoke Investment Group examined 27 separate bull and bear markets in the S&P 500 since September 1929. Over this 94-year stretch, Bespoke found that the average bear market lasted 286 calendar days, or about 9.5 months. That compares to the average bull market, which chimes in at 1,011 calendar days. 

There's no reason not to be optimistic if you're an investor.

4. Dividend stocks are a step above the rest

A fourth irrefutable truth for investors to embrace is that dividend stocks offer a rich history of outperformance. While there are countless investing strategies that work (i.e., help investors grow their wealth on Wall Street), dividend stocks tend to be a step above the rest.

A person holding a folded assortment of cash bills by their fingertips.

Image source: Getty Images.

Approximately 10 years ago, the wealth management division of JPMorgan Chase released a report that compared the annualized returns of companies initiating and growing their payouts to public companies that didn't pay a dividend over a 40-year stretch (1972-2012). Although non-payers have had short periods in the spotlight, it's dividend stocks that have shined brightest.

According to JPMorgan Chase, the income stocks produced an annualized return of 9.5% over 40 years. Meanwhile, the non-payers scraped and clawed their way to a meager annualized return of 1.6% in four decades.

Since income stocks tend to be profitable on a recurring basis and time-tested, they're just the type of businesses we'd expect to increase in value over long periods.

5. Time is investors' greatest ally

The fifth and final irrefutable truth of investing on Wall Street is that time is an investors' greatest ally.

Earlier, I told you that stock market corrections, crashes, and bear markets are a normal part of the investing cycle. What I neglected to mention is the other side of this coin.

With the exception of the 2022 bear market, every downturn in the Dow Jones Industrial Average, Nasdaq Composite, and S&P 500, dating back to their respective inceptions, were all, eventually, put into the back seat by a bull market rally. Though we'll never know precisely when downturns will begin, how long they'll last, or where the ultimate bottom may be, we do know that time has a way of healing all wounds on Wall Street -- at least for the major stock indexes.

Patience can also provide what I've referred to as "Wall Street's closest thing to a guarantee."

A bar chart showing a decline in negative total returns the long an investor holds their position in the S&P 500.

Data source: Bank of America Global Research. Chart by author.

Recently, Bank of America Global Research released a study that examined the probability of generating negative returns in relation to the total returns, including dividends paid, of the S&P 500, dating back to the start of 1929. As you can see from the above chart, there's a very clear correlation between time in the market and the likelihood of generating positive total returns.

Hypothetically speaking, if an investor were to buy an S&P 500 tracking index and hold that position for one day, they'd have had a 54% probability of generating a profit over the past 94 years. If this holding period extended to one quarter (three months), one year, or five years, the probability of a negative return fell to 32%, 25%, and 10%, respectively. 

Here's the kicker: no rolling 20-year period in the S&P 500, when back-tested to 1900, has ever produced a negative total return.  Time is the greatest ally an investor has on Wall Street.