Investor Fear Grows Near Record Highs, But DALBAR Data Shows Market Timing Costs Dearly

The American Association of Individual Investors' latest survey revealed that bearish sentiment now exceeds bullish expectations for the next six months, as of early June 2026, even as the S&P 500, Dow Jones Industrial Average and Nasdaq Composite recently scaled fresh all-time highs. Consumer confidence also slumped to a new low in May. Despite rising risks, historical research indicates exiting stocks during market pullbacks damages long-term wealth. DALBAR tracked investor returns from 2001 to 2020 and found the average individual investor earned just 2.8% annually, trailing the S&P 500's 7.5% annualized gain by 4.7 percentage points. Frequent and mistimed trades were the primary culprit. Institutional forecasters also miss: in June 2023, Deutsche Bank predicted a near-certain U.S. recession within 12 months, but the S&P 500 surged almost 25% instead. Analysts say holding quality equities for years remains the proven path, noting that the S&P 500 has rallied more than 740% since January 2000 despite multiple record bear markets.