The market has seen impressive gains over the past five years, with the S&P 500 rising 78%, the Dow Jones Industrial Average climbing 48%, and the Nasdaq Composite surging 88%. However, bull markets typically last only five or six years on average, and the current one is already in its fourth year. This means a bear market is likely on the horizon, making it crucial for investors to prepare.
One of the best ways to prepare for a bear market is by diversifying your portfolio. The Vanguard Morningstar Total Stock Market ETF (NYSEMKT: VTI) offers broad exposure to about 3,500 publicly traded companies across all U.S. market sectors. This diversification is essential because during a bear market, it’s impossible to predict which companies will fall the hardest or rebound the fastest.
While the Vanguard ETF won’t shield you from market declines, it will help spread your risk. Historically, missing the best market days during a downturn can significantly impact long-term returns. For example, JPMorgan Chase noted that from March 2005 to March 2025, seven of the 10 best days in the stock market occurred within two weeks of the 10 worst days, cutting 20-year returns in half for those who avoided the market during downturns.
Before investing in the Vanguard Morningstar Total Stock Market ETF, consider that other investment opportunities may offer higher potential returns. The Motley Fool Stock Advisor analyst team has identified 10 stocks they believe could produce significant gains, with past recommendations like Netflix and Nvidia yielding substantial returns.