Editor's note: Fear is permeating the market...

But it's not time to sell.

We've seen a lot of doom-and-gloom headlines about recession fears and the recent pullback. As a result, many investors are worried the bull market is nearing an end.

With that in mind, we're turning to Vic Lederman for today's Masters Series essay...

Vic is the editorial director at our corporate affiliate Chaikin Analytics. And he first shared these thoughts in the July 31 edition of the free Chaikin PowerFeed daily e-letter.

According to Vic, history shows the recent dip could lead to massive gains moving forward. That's reason enough to stay long right now...

Here's Why It Pays to Stay Long in This Market

By Vic Lederman, editorial director, Chaikin Analytics

Fear has been creeping back into the financial markets...

Some of the talking heads on TV are warning of a market crash. Others say we're in a "bubble of all bubbles."

It's easy to see where they're coming from.

As measured by the S&P 500 Index, the market traded at a forward price-to-earnings (P/E) ratio of more than 20 times going into July.

The eight largest companies by market capitalization were far more expensive. Their average forward P/E ratio was more than 30 times.

Put simply, the market has been looking expensive...

And after hitting a record high on July 16, the S&P 500 got a reality check.

By July 25, the index was off almost 5% from its peak. In dollar terms, nearly $3 trillion in market capitalization evaporated.

A drop like that is enough to raise eyebrows. Put it beside headlines warning of a crash, and it's no surprise that investors are scared.

But it's important to put this move in context...

Overall, the U.S. market has been on a great run in 2024. In fact, before the recent declines, the S&P 500 was up nearly 19% year to date.

That already beats the long-term average return for the index by almost a factor of two. Those gains also happened in half the time.

Twice the gains in half the time.

Let that sink in for a moment.

Folks, nothing goes up in a straight line forever. Pullbacks happen – even in a bull market.

This market was bound to take a breather. It's also not the first time it happened this year.

In April, the S&P 500 fell 5% from its peak. But once the decline was over, stocks rallied 14% over the next three months.

Looking back a bit further, a correction between last August and October ended in a roughly 10% drawdown. The ensuing rally up until this April's pullback delivered a nearly 28% gain.

Again, pullbacks happen all the time.

Even with the pullback in recent weeks, I'm confident about one thing...

We're still in a bull market.

It's about 21 months old. And it has delivered more than 60% gains so far.

Even better, we're still in the middle innings as far as the average bull market goes...

Since 1928, there have been 24 bull markets – not including the one we're in right now. They've averaged 1,102 days from trough to peak. That's about three years.

The longest of these bull markets lasted more than 12 years. It ended when the dot-com bubble popped in March 2000.

The average gain in these bull markets was 121%.

The biggest gain realized during a bull market was 582%. It belongs to the longest-running bull market I just mentioned.

As you can see, a 60%-plus gain in the current bull market amounts to half the historical average.

Yes, the market's valuations are high by historical standards. And nobody wants to overpay for an investment. But history has also shown that markets can stay expensive.

One way they stay expensive is through faster growth in earnings. That's happening.

Analysts project earnings for the S&P 500 to grow by 11.3% this year and 14.4% in 2025. That's above the historical median earnings growth rate of 10.7% over the past 34 years.

And the Federal Reserve is on the cusp of cutting interest rates for the first time in years. Lower rates are fuel for the U.S. economic engine.

In other words, don't panic about the market's recent fall...

We've seen pullbacks like this (or worse) before. Each time, the market roared back to new highs.

Based on past bull markets, a lot of upside remains today. That means plenty of new highs to reach.

So don't let the fear in the financial media shake you out of the markets.

Good investing,

Vic Lederman

Editor's note: According to Chaikin Analytics founder Marc Chaikin, this recent pullback isn't the last of volatility we'll see this year. With investor anxiety running high in this uncertain market, learning how to protect your wealth is more important than ever...

That's why Marc recently went on camera to reveal a little-known strategy that can help you brace for the volatility we'll experience for the rest of 2024. Learn more here...