78% of the Market’s Strongest Rally Days Occur in Bear Markets: Why You Should Keep Your 401(k) Invested

Historical data reveals that the majority of the stock market’s most significant upward movements take place during bear market periods. This counterintuitive finding underscores the importance of maintaining long-term investment strategies, particularly with retirement accounts like 401(k)s. Market analysis shows that attempting to time the market by withdrawing funds during downturns often results in missing these critical recovery days, which can substantially impact overall portfolio performance. Financial advisors consistently recommend staying invested through market cycles, as the most profitable trading days are frequently clustered during periods of market pessimism. This phenomenon highlights why disciplined investors who maintain their positions during volatile times tend to achieve better retirement outcomes than those who react emotionally to short-term market fluctuations.

How Bear Markets Affect 401(k), Stocks, and Long-Term Wealth

Why Bears Shouldn’t Scare Your Retirement Plan

During these uncertain times, many financial advisors are actually recommending patience when it comes to your 401k investments in a bear market. And there’s a good reason for this advice.

Christine Benz, director of personal finance and retirement planning for Morningstar, stated:

The data strongly supports this approach too. According to Hartford Funds, about 78% of the market’s best days happen during bear markets or within the first two months of a bull market, and missing these crucial rebound days can really devastate your long-term returns.

Hartford Funds mentioned:

What Makes This Bear Different

A bear market officially begins when stocks drop 20% from their recent peaks. At the time of writing, the S&P 500 has already fallen about 18.9% since February, with approximately 12% of that drop occurring right after Trump’s tariff announcements were made public.

Mark Hamrick, senior economic analyst, said:

So what should you do with your 401k during this bear market? Well, most experts suggest that staying invested while making some smart adjustments might be the best approach for most people.

Smart Moves Without Selling

Instead of immediately moving your 401k to cash, you might want to consider these alternative strategies during the stock market crash of 2025. First, international diversification could help by looking beyond just U.S. markets for additional stability in your portfolio. Another good option is Roth conversion, since lower account values right now could actually mean less tax impact when converting. And don’t forget about tax-loss harvesting, which lets you offset some gains with strategic selling of underperforming investments. These approaches can help maintain your long-term strategy without panicking and selling everything.

There is no way to go back and change your portfolio in the past. Keep in mind you can only plan how to manage it in the future and invested money should never be at risk of needing to be withdrawn in the short-term.

History Suggests Patience Pays

Many experts believe that the best time to invest in stocks is often during market downturns. And there’s also historical data showing that bear markets have occurred about 15 times since 1929, usually lasting around 18.9 months on average.

For example, the COVID-19 bear market of 2020 lasted just six months before we saw a full recovery. Similar patience may well be rewarded in this current bear market situation affecting 401k investments across the country.

Control What You Can

During times of uncertainty like these, it’s probably best to focus on what’s manageable: your budgeting, building up emergency savings, and maintaining a proper perspective on the long-term nature of retirement investing.

Michael Cochran, CFP and chief investment officer of BentOak Capital, had this to say:

So, is my 401k SAFE in a recession? Based on historical trends, the answer is generally yes. If you can avoid panic selling and remember that bear markets do eventually come to an end, often followed by strong recoveries that reward patient investors.