The cyclical rotation between bull and bear markets is an enduring rule of the market, and precise market timing is nearly impossible and extremely risky. For long-term investors, tracking the overall market performance through a low-cost, broadly diversified index fund such as the Vanguard S&P 500 ETF (VOO) represents a prudent and time-tested strategy. It not only helps investors share in the long-term growth of the market but also smooths the anxiety caused by short-term fluctuations to a certain extent, making it a pragmatic choice for dealing with uncertainty.
Since 1872, the U.S. stock market has experienced 26 bull markets and 26 bear markets. According to research from Fidelity Investments, the alternation between bulls and bears is a normal state of the market, implying that the current bull market that began in 2022 will eventually come to an end. Based on historical average duration, a bull market typically lasts about 3.5 years, so the current cycle may be gradually approaching its conclusion.
Faced with an inevitable market transition, some investors attempt to position themselves in advance to prepare for a shift in sentiment. However, accurately predicting the start and end points of any bull or bear market is nearly an impossible task. Data from research firm Invesco shows that during the period from 1995 to 2025, if an investor with a USD 100,000 portfolio missed the 10 best-performing trading days in the market, their final returns would be reduced by half compared to staying fully invested throughout the entire period. This clearly demonstrates that the probability of mistiming is extremely high, and the cost is substantial.
Rather than expending energy on guessing market turning points, investors may consider allocating capital to exchange-traded funds (ETFs) that track the S&P 500 Index. This is a widely recognized long-term strategy that ensures investors do not miss out on overall returns when the market rises.
Take the Vanguard S&P 500 ETF as an example. This fund directly tracks the S&P 500 Index, covering the stock price performance of 500 publicly listed companies across a wide range of sectors, including consumer goods, energy, industrials, and technology. Since its inception in 2010, this ETF has delivered an average historical annualized return of 14.9%. Although actual returns fluctuate from year to year, long-term holding helps investors fully benefit from the market’s growth dividends. Extending the time frame further, the S&P 500 Index has posted an average annualized return of 10% since its launch in 1957, which to some extent reflects the index’s long-term growth potential.
Beyond performance, the cost advantage of this fund is also notable, with an annual expense ratio of only 0.03%. On an investment of USD 10,000, the annual fee amounts to just USD 3, meaning that investors are able to retain a greater share of their actual returns.