How Do We Know the Stock Market Will (Eventually) Go Up?

We can't prove the market will eventually rise. But it makes sense when you consider that, over time, ingenuity drives innovation, which increases standard of living, which drives economic growth. Many companies now in the Dow, like Apple and Cisco Systems-both of which trade on the Nasdaq—didn't exist 50 years ago. (General Electric, which was removed from the index in 2018, was the last original member.) No one can predict when the stock market will hit its next high, or sink to a new low. But history shows that recoveries have been happening faster. The Dow took 25 years to recover from the 1929 crash. It took only 16 years to recover from the trough that began in 1966, and recovered from the 2008 crisis in just five years. Still, it bears repeating (and repeating): There's no guarantee markets will recover quickly from routs. It is a painful truth that investors can lose a lot in the bad times.

Should I Try to Time the Market?

We all yearn for certainty—in life, in love, in our 401(k)s. It's tempting to think we can make the stock market "less bad" by timing our investments to hit the highs, and avoid the lows. Can that really be so hard? In a word, yes. Studies show that timing the market usually means missing out on substantial gains. That's because only a handful of days are big gainers; picking them in advance isn't even possible for experts. One study found that had you invested $10,000 in the S&P 500 index in 2003, it would have grown to more than $30,000 by 2018. But if you didn't have any money in the index during the best 10 market days during those 15 years, you'd have less than $16,000. Ultimately, the best way to ride out the rollercoaster is to stay buckled in for the whole journey.

NEWS + INSIGHTS EDUCATION RIDING THE STOCK MARKET'S LONG ROLLERCOASTER

How to Invest

Riding the Stock Market's Long Rollercoaster

Stocks rise and fall. Smart investors stay on the ride

Dealing with Stock Market Volatility

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Over Time, Stocks Rise More Than They Fall

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How Do We Know the Stock Market Will (Eventually) Go Up?

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Should I Try to Time the Market?

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How to Invest

Dow, Nasdaq, S&P 500: What Does It All Mean?

What you need to know about the major market indices
Start Next Stack

If you've read all of the basics by now, you're ready to go a little deeper. In these two card stacks, we'll go into why you should start saving for retirement now (yes, right now). We'll also look into why the pros make such a big deal about diversifying your investments, and how, exactly, you can accomplish just that.