What Does the Future Look Like for the Stock Market? History Offers a Clear Answer.

The past couple of years have been prosperous for the stock market, with the S&P 500 (SNPINDEX: ^GSPC) surging by more than 64% since late 2022, as of this writing.

But as we head into 2025, many people are feeling uncertain about the future. Only around 38% of U.S. investors feel "bullish" about the market's six-month horizon, according to a December 2024 survey from the American Association of Individual Investors. That's down from around 53% in July 2024.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. See the 10 stocks »

While there's no way to tell exactly where the stock market will be a few months or a year from now, history suggests there's very good news about the future.

Image source: Getty Images.

Forget the market's short-term movements

It's easy to get caught up in the stock market's day-to-day fluctuations, and those ups and downs can be anxiety-inducing. The market can be volatile even in strong economic times, making it difficult to tell whether we're headed for a downturn or if it's just a short-term hiccup.

The good news, though, is that these fluctuations don't necessarily matter. What's far more important is the market's long-term potential.

Historically, the market has not only managed to recover from every downturn it's ever faced, it's also seen substantial positive returns over time.

Over the last 25 years alone, the stock market has faced some of the worst bear markets and crashes in history -- from the dot-com bubble burst in the early 2000s to the Great Recession to the COVID-19 crash. There have also been many other downturns in between, like the most recent slump throughout 2022.

^SPX data by YCharts.

Yet in that time, the S&P 500 has soared by a staggering 300%. If you had invested $5,000 in 2000 and simply let that money sit without making any additional contributions, you'd have around $20,000 by today -- despite all the ups and downs over the last 25 years.

Time in the market can reduce your risk

It's not just the last couple of decades that have been promising, either. Analysts at Crestmont Research studied the S&P 500's long-term performance over 20-year periods, and they found that every single one of those periods ended in positive total returns.

In other words, if you'd invested in the S&P 500 at any point throughout history and held your investment for 20 years, you'd have made money. Even if you'd invested just before a major market crash or if that 20-year period was particularly rough, you'd have ended with positive total returns.

It's impossible to predict what might happen to the market as we head into 2025, and past performance doesn't guarantee future returns. However, time is your most valuable resource when investing in the stock market.

No matter what happens in the coming months or years, staying invested for at least a decade or two can significantly reduce your risk -- and maximize your earnings.

One secret to better protecting your portfolio

While the market itself may be out of your hands, there's one factor within your control: The individual investments in your portfolio.

The healthier the company behind each stock is, the better its chances of surviving periods of volatility and earning positive long-term returns will be. Strong businesses will have everything from solid finances to a competitive advantage to a long-term plan for keeping up with industry trends. The best companies will also have a knowledgeable leadership team with experience guiding the business through good times and bad.

If a stock in your portfolio has lost its footing or is no longer a good fit for your goals, now could be the time to unload it while the market is still surging. When you're certain your portfolio only contains strong stocks, you're far more likely to weather any future storms within the market.

The stock market's short-term future may be uncertain, but history has promising news about its long-term potential. By investing in quality stocks and keeping your money in the market for at least several years (if not decades), you can maximize your earnings while limiting risk as much as possible.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $374,613!*
• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $46,088!*
• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $475,143!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of December 30, 2024

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.