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The stock market can be intimidating, especially during periods of volatility. But the good times can be stressful, too, because nobody knows for certain when the next downturn will begin.
While the S&P 500 (SNPINDEX: ^GSPC) has surged by roughly 24% over the past year, more than one-third of investors feel pessimistic about the market's six-month future, according to a December 2024 survey from the American Association of Individual Investors. So if you're feeling nervous about what lies ahead for the market, you're not alone.
That said, one of the worst investing moves you can make is letting emotions drive your decisions -- especially as we head into 2025. Here's why.
Check your emotions at the door
The past year has been prosperous for the stock market, but many investors are uncertain about what may lie ahead.
The average S&P 500 bull market since 1929 has lasted roughly three years, according to data from Bespoke Investment Group. Now that the current bull market has recently entered its third year, some investors may worry that a downturn is coming sooner rather than later. Coupled with a new presidential term and general uncertainty around what's looming in 2025, it's normal to feel nervous about the market.
However, making any rash decisions based on that anxiety could be costly. Nobody knows what the market will do in the next year or two, and it's entirely possible it could continue surging. If you pull your money out now in preparation for a crash, you could miss out on serious gains if that downturn doesn't arrive.
For example, say you stopped investing in March 2020 during the early stages of the COVID-19 pandemic. Many experts at the time warned that stocks could fall into a long-lasting slump, and it would have been understandable to avoid the stock market in an attempt to protect your money.
Not only was that crash short-lived, but stocks unexpectedly went on to earn record-breaking returns over the following years. By the end of 2020 alone, the S&P 500 had soared by more than 27%.
Staying in the market back then would have been nerve-wracking, but setting your emotions aside and continuing to invest even as stocks were crashing would've paid off big time down the road.
The key to calming stock market nerves
It's often easier said than done to avoid letting emotions drive your decisions, especially if you have a lot of money tied up in the stock market. But there's one thing you can do to calm stock market jitters and make it easier to stay invested through the rough patches: Invest in quality long-term stocks.