The stock market has given many investors quite a scare in recent weeks as the S&P 500 (^GSPC 1.15%) fell by more than 8% between mid-July and early August. Nasdaq (NASDAQINDEX: ^IXIC) things got even worse, with a decline of about 12% over that period and an official correction.

That dip appears to have been short-lived, however, as major market indexes have recovered as quickly as they fell. At the time of writing, the S&P 500 is up nearly 8% in the past two weeks, while the Nasdaq is up about 10% in that time.

Image source: Getty Images.

While many investors are relieved that this downturn hasn’t turned into something worse, others are nervous that this is just a temporary rally before prices fall again. That’s a valid concern, especially given how unpredictable the market has been lately.

Sometimes it can be helpful to look at how the market has performed during previous periods of uncertainty. While past performance is no guarantee of future returns, here is what history says about times like these.

To get an idea of ​​what the market is capable of, let’s look at two scenarios: one in which stock prices continue to rise and another in which prices fall significantly from their peak.

Scenario one: Stock prices continue to rise

One of the most recent and notable market recoveries occurred in 2020, during the early stages of the COVID-19 pandemic. The S&P 500 fell nearly 34% in less than a month, leading many investors to fear that we were headed for a deep and prolonged recession. However, the market recovered almost immediately before entering another bull market.

If you had stopped investing when stock prices started to fall, you likely would have missed the early stages of the market recovery. Even if you had invested at the seemingly worst time (in February 2020, just before the market crashed), the S&P 500 has still delivered a total return of almost 66% since then.

^SPX data from YCharts

On the other hand, suppose you sold your investments as soon as prices started to fall, and only invested again in January 2021 when the market rose. That might have seemed like a safer option, but the S&P 500 has only delivered a total return of about 49% since then.

^SPX data from YCharts

It’s nearly impossible to time the market effectively, so it’s best to just stay invested no matter what. If prices go up from here, you’re covered for the full ride.

Scenario two: Stock prices fall again

While the market could continue its upward momentum, it could also fall again — possibly even crash into bear market territory. No one knows for sure what will happen. However, a more significant decline is always possible.

That said, if a bear market is coming, it shouldn’t affect your long-term investment strategy. Even if you invest just before a major downturn begins, holding your investments long enough will virtually guarantee you positive returns down the road.

For example, let’s say you invested in an S&P 500 index fund in January 2000, just before the dot-com bubble burst, triggering one of the longest bear markets in history. The index didn’t reach a new high until 2007, just a few months before the market fell again during the Great Recession.

However, if you had persevered and held your investments until today, you would have made a total return of 281% — nearly quadrupling your money. Those first few years were tough, but patience pays off when it comes to the market.

^SPX data from YCharts

And as in the previous example, waiting to invest until the market was buoyant might have seemed like a safer option. But if you had waited to buy until, say, January 2015 (after the S&P 500 had hit a new all-time high and was officially in a new bull market), you would only have seen returns of about 172% today.

^SPX data from YCharts

The market will always be unpredictable in the short term and it can be expensive to buy or sell at the right time. While it is often easier said than done, simply staying invested (regardless of how the market performs) can protect your portfolio and maximize your income in the long run.